TREE NEWS reports: Citigroup now expects the Reserve Bank of Australia to raise interest rates twice more in 2026, lifting the terminal rate to 4.85% from a previous forecast of 4.60%. The bank said the revision reflects a two-speed economy, with a deepening property market correction on one side and an AI-related investment boom on the other, adding to capacity constraints and inflation pressure. Citi had previously expected only one more hike.
Citi: RBA to hike twice more in 2026, terminal rate at 4.85%
AI take
Citi's upgrade of the terminal rate matters less for the hike count than for the reason behind it: a two-speed economy where an AI-linked investment boom is treated as an inflation source rather than a growth story. That reframes the policy debate, since it implies capacity constraints, not demand, are doing the work. The property correction is the counterweight worth watching — whether it deepens enough to offset that pressure is the open question for the rate path.
Generated by AI for reference only.
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