Mortgage holders should expect interest rates to stay higher for longer, whether or not the Reserve Bank lifts them again. The RBA warns that competition for global capital from AI and data centre companies is pushing up its estimate of the neutral rate, and Christopher Kent said evidence suggests neutral rates are rising in Australia and abroad. At 4.6%, the cash rate is the highest in 15 years; markets have scaled back expectations of a November hike, but another rise by mid-2027 is nearly fully priced in and rates are not expected to fall below current levels by mid-2028. Commonwealth Bank’s Luke Yeaman argues that heavy government and AI-company spending makes rates less effective, so the RBA would have to hit households harder, and that loose fiscal policy would force even tighter monetary policy. Federal government spending reached 26.9% of GDP in 2025/26, the highest in 40 years excluding COVID-19, and HSBC’s Paul Bloxham urges further spending cuts in the mid-year fiscal update due in December.
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Related tickers and likely impact
DXY
▲ Likely positiveRelevance: low
| Market | Currencies |
|---|---|
| Close on 10/16/2026 | 101.78 |
| Change that session | -0.20% |
XAU/USD
▼ Likely negativeRelevance: low
| Market | Gold |
|---|---|
| Close on 10/16/2026 | 4,165.63 |
| Change that session | -0.13% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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