'Good signs' for interest rates after economy growth stronger than expected

Wednesday, 4 March 2026 11:52

"The Reserve Bank, who is watching all of this with concern to interest rates, will like what they see."

Australia's economy performed stronger than expected in the first half of the financial year, growing by 0.8 per cent in the last three months of 2025.

The quarterly figure exceeded expectations that the country's gross domestic product (GDP) was only going to grow by 0.6 per cent.

It also grew by 2.6 per cent from this time last year, beating expectations of a 2.1 per cent growth.

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"There was broad based economic growth in the quarter, with rises observed in a large majority of industries," ABS head of National Accounts Grace Kim said.

"GDP per capita increased for the fourth consecutive quarter and is now 0.9 per cent higher than a year ago, the highest through the year growth since December quarter 2022."

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Governor of the Reserve Bank of Australia Michele Bullock in discussion with John Kehoe at the 2026 Financial Review Business Summit held at the Hilton hotel in Sydney on March 3, 2026.

9News' political editor Charles Croucher said it was a "good sign" for the economy, and that the Reserve Bank of Australia (RBA) would see it as a welcome sign, especially after the latest interest rate increase.

"The Reserve Bank, who is watching all of this with concern to interest rates, will like what they see there," he said.

"That is the highest quarter of growth in a while, and it should see that first figure flow through to the next yearly figure as they go on."

He noted the figures were driven by Australians both saving in high amounts, but also spending.

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people walking on the busy Pitt Street retail area in Sydney during the boxing day sales

The large shopping events of Black Friday and Boxing Day at the back end of last year contributed to this.

"Those who can save, are saving, those who can't are continuing to spend," Croucher said.

"It seems Australians were trying to take advantage of those sales with things being so tight elsewhere."

Croucher cautioned things could change, however, saying Australians now could be tighter with the purse strings in light of the higher spending.

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He also said there were a couple of warning signs the RBA would take note of.

"Household spending is still a little high, with an economy that is a little hot that will worry them," he said.

However, he insisted the signs were more positive than negative for borrowers.

"What we've seen today won't push for a big interest rate jump," he added.

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

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