The winners and losers of an RBA rate hike
Banks, insurers and miners are predicted to be among the ASX’s biggest gainers if the Reserve Bank raises official interest rates next year; This is a scenario that money markets are pricing in following higher than expected inflation figures.
As the Central Bank prepares to hold its final board meeting of 2025 on Tuesday, markets are predicting that the current 3.6 percent cash rate will remain unchanged this year, with some predicting rates will rise in 2026.
Markets predict that the current 3.6 percent cash rate will remain unchanged this year.Credit: Getty Images
Such a rise in interest rates could help banks expand profit margins, while insurance companies tend to earn higher returns on their investment portfolios when interest rates rise, experts said.
Market watchers said miners may be viewed more favorably in an environment of rising rates, but added that real estate stocks and infrastructure are more likely to struggle.
Michael McCarthy, market strategist at online stock trading platform Moomoo, said he thinks interest rates will hold steady on Tuesday and rise early in the new year, and that banks and companies with lower debt or clean balance sheets will be in the best position.
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“The political environment right now may not be conducive to that, but banks have traditionally benefited from interest rate movements because they give them the opportunity to increase their margins,” he said.
Meanwhile, companies that tend to rely on more debt, such as infrastructure and real estate investment trusts, will likely feel the squeeze as interest rates rise or stay high, McCarthy said.
Financial markets have priced in a rise in the RBA interest rate in 2026 after the monthly consumer price index showed inflation rising from 3.6 per cent in September to 3.8 per cent by October. The RBA is targeting inflation of 2 to 3 per cent, and various bank economists have recently changed their forecasts to no longer foresee cuts from the RBA.
