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The Australian dollar drew support on Tuesday after ANZ, one of the country’s largest lenders, said the Reserve Bank of Australia has reached the end of its tightening cycle.
ANZ Research now expects the cash rate to remain at 3.60 per cent for an “extended” period, marking a significant shift from earlier forecasts that assumed additional easing in 2026.
The bank says recent inflation pressures, steadier economic growth and a labour market moving into balance mean the RBA is unlikely to deliver further cuts.
At the same time, ANZ says it is “difficult to see a rate hike in 2026”, pointing to the rise in unemployment over the past year and conflicting signals across demand indicators.
The new call represents an unusual end to an easing cycle.
ANZ notes that easing cycles typically finish with the cash rate at a stimulatory level and the economy operating with slack.
This time, the bank says the RBA is approaching the end of its cycle with the economy growing around potential, the labour market close to balanced and policy near a neutral setting.
ANZ remains confident that the recent lift in trimmed mean inflation is temporary but acknowledges that “signs of ongoing inflation pressures” in the monthly CPI warrant caution.
The bank adds that Australia’s sensitivity to earlier rate cuts, particularly the strong response in interest-sensitive sectors such as housing, suggests the neutral rate is higher than before the pandemic and that the current cash rate is “not far from neutral”.
While ANZ can “construct scenarios” in which the next move is higher or lower, it sees neither outcome as likely in the current environment.
A rate hike, it says, would require trimmed mean inflation to remain persistently above target alongside a stable unemployment rate – a combination that would leave the economy “operating above potential”.
Above: Money market pricing showing investors no longer see the prospect of further hikes. At the same time, any future hiking cycle looks shallow.
A cut would require a softer labour market feeding into household spending, business conditions and GDP growth, combined with confidence that inflation is heading toward the target midpoint. 
For now, ANZ says the most probable outcome is simple: the RBA is done.
The bank stresses that an extended period of stability at 3.60 per cent is the most consistent fit with current economic conditions.
For the Australian dollar, the signal of “no further hikes” is an implicitly supportive development.
Analysts say that when rate-cut expectations are removed from the outlook, it reduces downside pressure on a currency and reinforces yield stability relative to global peers.
ANZ’s call also suggests that the RBA is comfortable with the economy’s current momentum, a stance that tends to underpin foreign investor confidence in AUD assets.
Market focus will now shift to upcoming inflation data and the RBA’s early-2026 meetings, but ANZ’s updated assessment indicates Australia’s policy anchor is unlikely to shift in the near term.