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Economists at Commonwealth Bank of Australia tip a February rate hike

BY Reuters | ECONOMIC | 12/15/25 07:47 PM EST

SYDNEY, Dec 16 (Reuters) - Economists at the Commonwealth Bank of Australia (CBAUF) now expect the Reserve Bank of Australia will hike interest rates in February next year as inflationary pressures pick up amid a capacity constrained economy.

"We see a rate hike as necessary to bring the economy back into balance and help return inflation back to its target," said Belinda Allen, head of Australian economics at the CBA, in a note to clients on Tuesday.

"But we don't expect a large hiking cycle, only fine tuning by the RBA and see the cash rate sitting at 3.85% at the end of 2026." (Reporting by Stella Qiu Editing by Shri Navaratnam)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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