Buying ASX shares and concerned about the impact of potentially further increases in interest rates?
You're not alone.
Though it's worth noting that the All Ordinaries Index (ASX: XAO) has gained 2.9% since 2 February, the day before the Reserve Bank of Australia increased the official cash rate.
As you're likely aware, on 3 February, the RBA pulled the trigger and lifted the benchmark interest rate by 0.25% to 3.85%.
That marked the first tightening since 8 November 2023, when the central bank boosted the cash rate to 4.35% to tamp down hot-running inflation.
But, after delivering three rate cuts in 2025, the RBA reversed course at its maiden meeting in 2026 amid resurgent inflation.
Commenting on its decision on the day, the RBA noted:
The board has been closely monitoring the economy and judges that some of the increase in inflation reflects greater capacity pressures. As a result, the board considers that inflation is likely to remain above target for some time.
Which brings us back to our headline question.
Should investors buying ASX shares do so with expectations of more rate hikes ahead?
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What should ASX investors expect from interest rates in 2026?
Nomura's Andrew Ticehurst said the three rate cuts in 2025 helped to boost the recent strong jobs figures and stoked the uptick in inflation.
Ticehurst believes ASX investors should expect one more interest rate hike from the RBA in 2026 before the central bank holds steady (courtesy of The Australian Financial Review).
According to Ticehurst:
Monetary policy is now tighter, fiscal policy is likely to be tightened a little bit, and the Australian dollar has risen as well. They're all moving in a way which is going to cause growth momentum to slow this year.
The RBA is talking hawkishly now … we've seen them change tack quite quickly over the past six months, but if the data does soften up a little bit over the next three or four months, you'll see their language change again.
Jarden's Micaela Fuchila, on the other hand, believes that ASX investors have seen the last RBA interest rate boost of the current cycle.
Fuchila said the jump in the Aussie dollar and increasing bond yields should help to keep inflation in the 2.7% to 2.9% range, within the RBA's 2% to 3% target band.
As for this month's rate hike, Fuchila noted:
There were fundamental changes around the consumer in particular. We had things that we hadn't seen in a long time, a lot of savings in consumers' balance sheets. 2025 was a year when we had a Goldilocks scenario for the consumer for the first time.
