Home topics news generated by AI News News February rate hike now 73% likely after hot inflation data stuns markets Yajush Gupta January 29, 2026 Markets jumped from 56% to 73% odds of a February rate hike within hours of today’s CPI release. Matt Bell of Oliver Hume says the sugar hits expected months ago haven’t materialised for property. What’s happening: Australia’s Consumer Price Index accelerated to 3.8% annually in December, up from 3.4% in November, whilst trimmed mean inflation rose to 3.3%. Markets immediately increased the probability of a February rate hike from 56% to 73%, effectively ending one of the shallowest easing cycles in more than three decades. Why this matters: The reversal carries immediate implications for property markets and mortgage holders, with a 0.25% rate increase now expected next week. The pivot in expectations from rate cuts to rate hikes happened fast last year, and accelerated again in January. “Before today’s inflation data, the market had priced in a 56% chance of a rate hike at February’s meeting,” said Oliver Hume Chief Economist Matt Bell. “With the trimmed mean measure coming in above market expectations, and no more significant data coming before next week’s RBA decision, that 0.25% rate hike is now pretty much locked in.” According to the Australian Bureau of Statistics, headline inflation rose to 3.8% in December from 3.4% in November, exceeding market forecasts of 3.5%. The trimmed mean, which strips out volatile items, also edged higher to 3.3% from 3.2%. Bell noted that