RBA hikes cash rate to 3.85% – Here’s how Australia’s big 4 banks responded

This is the latest cash rate hike in over two years, with the central bank delivering a 25bps hike in November 2023. 

“A wide range of data over recent months has confirmed that inflationary pressures picked up materially in the second half of 2025,” the RBA Board said in its post-meeting statement.

Despite maintaining its previous assessment that the pick-up in inflation was due to “temporary factors”, the policy-setting committee admitted the data suggest private demand is "growing more quickly than expected", capacity pressures are "greater than previously assessed", and labour market conditions are "a little tight".  

Australia’s key interest rate is now 3.85%, where it was in July 2025.  

The Board’s latest monetary policy decision was widely anticipated by both markets and major economists, with inflation picking back up again at the end of last year and unemployment rate dropping below expectations. 

Prior to the meeting, the economic teams at all four Big Four banks were predicting a cash rate hike off the back of the RBA likely to remain concerned about capacity pressures and whether the current settings are restrictive enough to rein them in.   

Westpac chief economist and former assistant RBA Governor Luci Ellis earlier said the quarterly inflation result in December suggests the RBA “is likely to raise rates” at the February meeting. 

Following the February hike, NAB expects another increase in May, which it said “would reflect a recalibration of policy”.

During the post-meeting press conference, RBA Governor Michele Bullock said, "The Board is uncomfortable with inflation at the level it is." 

In the updated Statement on Monetary Policy (SMP), the RBA now forecasts core inflation will not return to the near mid-point (2.6%) until June 2028. 

In August, the forecast was for core inflation to land at 2.6% by December 2025. 

CBA

Nearly three hours after RBA’s delivery of its February monetary policy decision, the Commonwealth Bank of Australia (CBA) announced it will increase variable home loan rates by 0.25% p.a., effective 13 February.

CBA was the first of the Big Four to respond. 

“We know that interest rate changes can create additional pressure for our home loan customers, which is why we’re focused on providing support and helping them stay in control of their finances,” said Angus Sullivan, CBA’s Group Executive, Retail Banking. 

The bank’s customers can access support through the CommBank app, by speaking with a lending specialist, or by using tools such as the digital home loan repayment calculator to explore their options.

ANZ

ANZ will also increase interest rates for its variable home loans. 

Starting 13 February, variable home loan customers will see their rates lifted by 0.25% p.a. 

ANZ said it “continues to review” other interest rates. 

Similar to its Big 4 peers, ANZ predicts further hikes given the RBA’s focus on capacity being behind the lift in inflation in the second half of 2025. 

NAB

Joining the pack, NAB confirmed a 25 basis point hike will apply to its variable home loan products. 

“Following the Reserve Bank of Australia’s decision to increase the official cash rate today, NAB’s standard variable home loan interest rate will rise by 0.25% p.a. from 13 February 2026,” the bank said.

NAB maintains its forecast that a follow-up 25bps hike is coming in May, which would be the meeting following the release of March quarter CPI.  

Westpac

Westpac will be the last among the four majors to hike its variable home loan interest rates.

Westpac announced the 0.25% rate hike will be automatically applied to variable owner-occupier and investment property loans on 17 February. 

The move will see the monthly repayment of an average 25-year home loan paying principal and interest go up by $76. 

Westpac’s Luci Ellis, in a statement released after the RBA Board’s meeting, said further rate hikes are “clearly a possibility”, likely in May, “absent a downside surprise” in March quarter inflation outcome.