Second RBA Rate Hike in 2026? What March 17 Means for ASX Banks and REITs

The RBA's March 17 meeting just became a lot more interesting.

When Governor Michele Bullock told the AFR Business Summit on 3 March that the meeting would be "live," markets took notice. Within hours, the probability of a second RBA rate hike in 2026 jumped from just 10% to 33%, according to IG market analyst Tony Sycamore. That is a meaningful shift, and one that ASX investors can't afford to ignore in the weeks ahead.

The RBA already raised the cash rate by 25 basis points to 3.85% on 3 February 2026. The question now is whether the board moves again before it even receives the next quarterly inflation print, which isn't due until 29 April.

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Why March Is Suddenly Back on the Table

The short answer is that the Australian economy is performing stronger than the RBA expected, and inflation is still too high for comfort.

GDP grew 2.6% over the year to December 2025, the fastest pace in nearly three years and well above the RBA's own forecast (ABS, March 2026). However, within that strong headline number, household consumption grew just 0.3% for the quarter, suggesting the consumer is already feeling the pressure. At the same time, underlying inflation came in at 3.4% for the December quarter, and the RBA doesn't expect it to fall back within the 2 to 3% target band until early 2027.

Adding to the pressure, Brent crude is currently trading around US$81/bbl, up roughly 11% in a single week on fears of supply disruption through the Strait of Hormuz. A sustained oil price rise would feed directly into headline inflation, giving the RBA even less room to pause. Bullock made clear that if the data demands it, the board is prepared to act before even waiting for the next quarterly inflation report in April. The probability of a March hike peaked at 33% following her speech and has since eased, with most major banks now pricing a March hold as the base case.

That said, CBA and UOB both point to May as the more likely moment for the next move. The debate, though, is genuinely open.

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The ASX Sectors Under Pressure

REITs: Feeling the Squeeze Most

Property trusts are the most rate-sensitive part of the ASX. When rates rise, REITs face higher borrowing costs on their debt, and their assets are valued lower by the market. The income they generate also looks less appealing when investors can earn more from safer alternatives like bonds. Scentre Group (ASX: SCG), which owns and operates Westfield shopping centres across Australia, is a widely watched bellwether for how retail REITs respond to rate moves.

Investors holding REITs should pay close attention to how much debt those trusts are carrying and when that debt is due for refinancing. The ones with loans maturing soon will feel a second-rate rise the fastest.

Banks: A More Complicated Picture

At first glance, rising rates seem good for banks. A higher cash rate typically lifts their net interest margin, which is the difference between what they charge borrowers and what they pay depositors. That supports earnings in the short term.

But the other side of the coin is credit risk. As mortgage repayments climb, more households come under financial stress. Many Australians who refinanced during the 2024 to 2025 rate-cut period are now facing renewed repayment pressure, which some analysts are informally calling a second mortgage squeeze. If that stress turns into missed payments and rising arrears, it starts to hurt bank earnings. The February rate hike has already increased pressure on variable-rate borrowers, and a second hike would add to that burden.

Consumer Discretionary: The Quiet Casualty

Consumer-facing companies- retailers, travel operators, hospitality- tend to suffer when rates rise because disposable income falls. With the household savings rate already elevated and consumption growth soft, another rate hike would further squeeze spending capacity. This sector often doesn't make the headlines in rate discussions, but the earnings impact can be meaningful.

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What a Hold Still Means

Here is something many investors miss: even if the RBA holds on March 17, a hawkish tone in the statement can hit rate-sensitive assets almost as hard as an actual hike. Markets price what they expect to happen, not just what has happened. If May starts looking like a near-certainty for another rise, REITs and income stocks will likely reprice before then.

The May meeting, when the RBA will have fresh quarterly CPI data in hand, is shaping up as the more probable flashpoint.

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Investor Takeaway

Key points to watch before 17 March:

• The RBA decision on 17 March (rate hike probability has eased from a peak of 33%, with most banks expecting a hold)
• Any further commentary from Bullock or the RBA board
• Oil price moves and Middle East developments
• Household spending data as a guide to credit risk

A second RBA rate hike in 2026 is far from certain, but the shift from a 10% to a 33% probability in a single day illustrates just how quickly the landscape can change. REITs face the clearest valuation risk; banks present a mixed picture of margin tailwinds and credit headwinds; and consumer discretionary stocks remain a quiet but real casualty.

For income-focused investors navigating this environment, particularly those relying on dividend income from banks or REITs, understanding which companies have the balance sheet strength to sustain payouts matters more than ever. ASR's Income Report provides a detailed analysis of ASX dividend sustainability, including how rising debt costs affect payout ratios across key sectors.

📊 Not sure how to position your portfolio ahead of March 17? Download ASR's free Top-3 Stocks & Market Outlook Report for current stock recommendations and a forward-looking view of the sectors most affected by Australia's rate outlook.




This article is for informational purposes only and does not constitute financial advice.

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