#303 - WARNING! The RBA is about to HIKE Interest Rates

Everyone thinks the RBA is about to cut interest rates. The media is telling you. The banks are telling you. Even the government wants you to believe it. But they're all wrong. And if you believe them, if you borrow more, if you buy a property, if you think your mortgage is about to get cheaper, you're about to get blindsided. Here's what nobody's telling you. The RBA is actually trapped. Inflation

isn't dead, it's just hiding. And the data that's coming in over the last, you know, few months, it's going to force them to do the one thing that will shock every single Australian homeowner. They're going to actually raise rates, not cut them. raise them. I know that sounds insane, right? Because you're so used to low rates. I know it goes against everything you're hearing, everything they're telling you, but

I'm going to show you exactly why it's about to happen. The data they're looking at, the pressure they're under, and what you need to do right now to protect yourself before it's too late. late. I'm Lloyd James Ross, seven figure investor and entrepreneur and I've helped thousands of business owners and professionals turn financial stress into success. If you're stuck in old money habits, overwhelmed by investing or unsure where to start, this

is for you. I'll give you the mindset and strategies to take control, grow your wealth and achieve financial freedom. It's time to make your money work for you. At its most recent meeting, the RBA held the cash rate at 3.6% and explicitly said it did not consider cutting rates. That's not the language of a bank about to loosen policy. So here are the key facts. Rates were cut three times in 2025. which

they shouldn't have been, but they were. And then they stopped at 3.6%. The RBA's inflation forecasts have been nudged higher into mid-2026, which is this year. And the deputy governor, Andrew Hauser, stressed that inflation is still too high, as we know. It's in the threes, right? When a central bank stops cutting and puts inflation first, markets start to price in rate hikes instead of all the relief. So why the no-cut story is probably now ending? Inflation

isn't gone. It's just cooling temporarily. And the latest monthly CPI report showed that inflation did

ease somewhat. It went down from 3.8% to 3.4%, but it's still above the RBA's 2% to 3% target. That's what they're targeting. 2% is the best, meaning there's still some pressure there. So core inflation still weighs heavily on the RBA's decisions. So yes, inflation has slowed a little bit, but that's not yet in the zone where cuts can make sense now at all. In fact, they made that mistake last time when they should have left rates at

4.1 and they cut them right down to 3, but they should have just left them. And they restocked inflation. So the notion that easy cuts are coming across 2026 is fading. And everybody knows that now. Hikes are starting to creep into the forecasts. They're assuming that hikes are going to happen this year. So market economists are starting to flip Yeah, the big four banks are now, they're all split. Some are forecasting a 25% point hike as

soon as next month, February, right? Others are still seeing a bit of a hold. But economists are warning that the RBA may raise rates at least twice in

2026, right? Persistent underlying inflation will force them to do that. So it's not random chatter. It's not just speculation. It's becoming more of a consensus now across the board. And what does this mean for your money? What does this mean for your personal finances? So if you're a mortgage holder, particularly if you've just recently grabbed the mortgage, arguably, what could possibly be not a really good time? Record high houses.

mortgage rates fairly low still, and you're like, yeah, I've got my house, and then bang, you're going to get hit with some rate hikes, right? Like, why is my mortgage going up? I didn't understand what interest rates mean. This is what most people do. They jump into the housing market because they get FOMO. They want to go through the rite of passage in the Australian life of owning a home. If you don't own a home, you're a peasant. And they want to make sure they're not peasants, so

they go and get a house. There's other reasons why they buy houses, too. I get it. But a 0.25% rate hike will add to the repayments obviously. And people won't realize that until it happens, especially

again if you're a high debt household, meaning you've just acquired a home and you're already challenged to meet the repayments. So that's for homeowners, that's for people who own a mortgage. What about for consumers? Well, it's good for us. The consumer Confidence will dip if rates go higher, which reduces spending. Now, the whole idea of that is that so inflation falls. Now, if you're a consumer, it means you can start buying maxi bonds without having to mortgage your house and get one. It

means you can buy maxi bonds for less than $6.60. It just means that maxi bonds aren't gonna go up. And I know that's the most important thing as a consumer. When you go into the corner shop and you go to get your maxi bond, you don't really wanna be paying 10 bucks for it. Now, if we don't get in front of this and hike rates, you're gonna be paying 20 bucks for a maxi bond. And I know you don't want that. I don't want that. So as

a consumer, we want rates to go higher. The unfortunate thing is most consumers are mortgage holders too, or a lot of them are. And so you're like at this impasse, like I want rates to go up because I want to have my maxi bond,

but for not paying too high a price for it, but I also want to make sure I don't get hit with my mortgage. It's a hard place to be. What about as an investor? Well, interestingly, when rates go up to curve inflation, assets fall. So this is very much an inverse correlation with interest rates. And people don't understand this too, but it's a very important macroeconomic principle. It's physics. It's mathematics. It's not up for debate. When rates go up, asset prices fall. I've done a number of

episodes. Go back and check out all our episodes. I've done a few episodes on the specifics of this. So if rates start to go up, property prices will come off the ball a bit. I think too, based on what happened in Bondi recently, if a new government is formed with One Nation, and I'm pretty certain they have a good chance to win. They're starting to edge in front of the liberal coalition. If

they win, if another party, no matter who it is, comes in, they're going to drop immigration down below 100,000. Now if that happens, less people, less demand for housing. So that's going to cool prices. The other thing is inflation will, if they need to get hold of inflation, they'll increase interest rates, which I'm talking about right now. That will curb property prices because people won't be able to borrow as much to buy. Plus

they won't want to have more mortgage repayments. So demand for property fueled by debt will fall and prices will fall or they'll stabilize as a result. Now, as rates go up too, there'll be more support for the Australian dollar. Now, you don't have to be a genius to see in the last few months, the Australian dollar has gone from 61 US cents to 67 US cents. So there's been like a 10% increase in the value against the USD and other currencies of the Australian

dollar. And the reason why that's happening is because interest rates are going to go up. So in a country, whenever you increase interest rates, you increase the returns people get on the bonds when they put money in the country. So it's increasing the demand for our Australian bonds. And that means that effectively, Australian

dollars gonna increase in improving value against the other currency So if you're someone who likes to travel to America, you're gonna get more American dollars for your Australian dollars Okay, the other thing that's gonna happen is capital is gonna shift into you're bearing assets again like bonds and turn deposits So people are gonna start putting money in different places, which means they'll pair it a little bit out of the stock market, too so you're gonna see price stabilizational falls

Maybe fall, but I think stabilization in property because the demand is still there. You're going to see falls maybe or stabilization in the stock market. You're going to see other assets fall. You're going to see bonds rise in demand. So you're going to be rising in prices and bonds and turn deposits will become more popular. That's what will happen in terms of the investment landscape. Just quickly, if you're ready to take control of your finances but feel stuck on

where to start, I have a solution. My book, Money Buys Happiness, simplifies investing and wealth building with practical steps to help you achieve financial peace. Get your copy via the link in the show notes and let's get your money working for you. Now back

to the episode. So this isn't just about rates changing, it's about changes of how money's flowing through the entire economy, yeah? Now, why the RBA might actually pull the trigger on this and increase rates. If inflation stays above the target, which it looks like it's going to, and household spending remains solid, which by

the way, you just go to the corner shop and you see if household spending is high. My wife recently went to a concert and people were paying $300 for a VIP ticket that wasn't even VIP to drink beer out of plastic cups. I think it's pretty solid. I don't think that's going to wane. Even with a 0.25% increase, there seems to be no end to people spending money. It's just crazy. I think that's going to remain solid. That's going to increase the likelihood of a

rate increase. Household spending growth is really what's still buoyant. It's going to really probably force their hand. We've got to look at the labor market, the jobs market, right? It's not collapsing. Unemployment's

actually edging... A little bit higher, but not really sharply, which is interesting. In fact, recently it just came down. So, if unemployment was going up, the RBA is like, oh my God, we can't do this and increase rates because we're going to exacerbate the unemployment. But the reality is it's not. So, there's all these factors like the spending is still high, the jobs are still there, so there's not unemployment increases. Inflation is

still sticking high and assets are at all-time highs. Like, the reality is that the RBA is completely justified for increasing the interest rate. It makes so much sense, right? So the RBA's job is not just to guarantee the cheap money, of course, it's to actually manage... The idea is to... Manage two things, unemployment and inflation. That's pretty much what it's there for, okay? To avoid big crashes. So here's the big mistake that most Aussies are gonna make. Most people are betting

on rate cuts. And of course they want them to cut because they all want debt and property. They want property to keep going up. So like, hey, cut rates. They all do little dances on TikTok when they cut rates. So whether you've got a mortgage or you've got investment decisions, people are wanting lower rates because it's cheap money and that fuels asset prices. and who doesn't want to get richer, right? But they're not pricing in cuts and

inflation is still above the target. So consumer sentiment really and household debt really remains somewhat fragile at this point because it is inflated and we will see rates go up at some point. So by the time that happens in the market or people admit it, the moves are typically priced in. So, if you want to stay ahead of the Australian economic turning points, stay

close to this channel. Because I do these like every month, we're doing more of these and I'm really our fingers on the pulse when it comes to the economy. In fact, If you go back and listen to my last few episodes on this before all this stuff happened, we've been very accurate with our anticipation of what the RBA will do. Go back. I challenge you. Go back and look

at the episodes, listen to what happened, and then go track what happened. It's fairly obvious to see what needs to happen because a lot of people don't look at the primary data. They don't look at Maxibon prices when they're in the BPI, but I think when I see them, I'm like, why did I just pay $6.60 for that Maxibon? That's interesting. Why is my McDonald's meal $30? Why? They're not understanding that that's that it's

huge inflation. And it's not even like small, it's more than 3%. So you don't have to be a rocket scientist to work it out. But then because I'm not a mortgage holder, I'm completely objective. I'm a property bear. At this point in time in the cycle. I just don't think there's many of me around. I think when you tune into our channel, you're going to get a very objective opinion without me being influenced too much by owning housing. I don't even own

a house. I don't even own any property. If you want an unbiased objective opinion with some data that backs it up, some real current data about what's happening in the Australian economy and how that affects you, subscribe to this channel because I'm not here to BS you, right? I got no reason to. So yeah, hit the subscribe button, share this with a friend. See you in the next episode. Leave us a comment below and I'll

see you soon. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe to us on YouTube so you never miss an episode. And if you're serious about building wealth, make sure to check out the links in the show notes and follow me on all social media platforms at