Listen to Dianne Colledge on SBS On The Money
Dianne Colledge, private client adviser at Morgans, joined SBS Finance Editor Ricardo Gonçalves on SBS On the Money on Friday 10 July 2026, discussing why the ASX ended a three-week winning streak despite fresh record highs on Wall Street, the tech stock rally, and where Morgans sees value for investors. Listen to the full episode below.
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If you're a mortgage holder or an investor trying to plan ahead, you've probably asked the same question this year: when will interest rates finally come down, and will they go up again first? On Friday 10 July 2026, Westpac gave the market a fresh answer, bringing forward its RBA rate cut forecast from 2028 to 2027, while still tipping two more rate rises before then. Dianne Colledge, private client adviser at Morgans, unpacks what this means for the Australian share market and for investors positioning their portfolios.
Key takeaways
- Westpac has moved its RBA interest rate forecast forward, now expecting rate cuts to begin in 2027 rather than 2028.
- Despite the cut forecast, Westpac's chief economist still expects two more interest rate rises in 2026, most likely in August and around the November RBA meeting.
- Morgans' in-house economist shares this view, with consensus pointing to a cash rate around 4.6% and inflation holding near 4.4%.
- The Australian share market (ASX 200) snapped a four-day losing streak on the news, rising 0.5%, led by miners.
- Morgans is currently favouring global share exposure over Australian shares, with a particular focus on AI-related opportunities.
Why is the RBA expected to raise rates again before cutting?
The short answer, according to Morgans' house economist Michael Knox, is inflation. The Reserve Bank has been signalling since its June 2026 meeting that it is more concerned about inflation running hot than about slower economic growth. Westpac's economics team reads the RBA's communication the same way: the central bank appears willing to tolerate weaker growth in the near term if it means bringing inflation back within its 2 to 3 per cent target band.
The main driver isn't a single event but a pattern building over recent months. Higher energy and input costs have been passing through into the prices of everyday goods, from building materials to homewares, at a rate faster than usual. Electronics prices have also firmed, partly on the back of strong demand linked to the AI investment boom. Put together, businesses have been passing on more of their cost increases than economists would typically expect at this stage of the cycle.
What has to happen for rates to actually fall in 2027?
For the RBA to feel confident enough to cut, inflation needs to show a sustained slowing, and the economy needs to run below trend for long enough to create some spare capacity in the labour market and broader economy. If that plays out, both Westpac and Morgans expect the RBA cash rate to begin easing in 2027, a year earlier than the 2028 timeline previously pencilled in.
What this means for the Australian share market
The ASX 200 rose 0.5 per cent on the day this forecast was released, ending a four-session losing streak. According to Dianne Colledge, the turnaround largely reflected overseas market moves rather than a local trigger. Basic materials and base metals, which had dragged global markets down over the previous sessions, retraced strongly overnight. That flowed through to solid performances from major miners including BHP and Rio Tinto, along with a notable move higher in uranium and copper-related stocks. When one sector leads, it tends to pull broader market sentiment with it.
Telstra's share price reaction
Telstra shares fell around 4.5 per cent in the days following a mobile network outage, a sharper move than the initial 1.5 per cent dip immediately after the incident. Dianne notes the stock had arguably been trading at a premium before the outage, and the sell-off may reflect both genuine reputational concern and a convenient trigger for profit-taking after a strong run (Telstra had touched a high of $5.55 in May 2026). A similar pattern played out with Optus following its own outage, though Optus is not listed on the ASX.
IPO market activity: a look at 2026 listings
2026 has been a relatively quiet year for ASX new listings, with only 17 IPOs to date. The standout has been FDC Consolidated, which raised $400 million, the largest Australian listing this year, and has traded at a premium since debut. Morgans participated in seven of the year's 17 IPOs, including Skin Candy and SpaceX.
Dianne points out that Australian investors increasingly have access to major offshore listings, either directly or through Morgans, meaning the relatively subdued local IPO count matters less than it once did for portfolio opportunities.
Where Morgans is currently positioning client portfolios
Morgans is presently advocating a higher weighting to global share exposure over Australian shares, largely reflecting a stronger offshore growth outlook. Areas of focus include:
- Direct global AI-related names: ASML, TSMC, CBA-equivalent global tech leaders, Meta, and Broadcom
- Emerging markets exposure: accessed through ETFs
- Hedged ETFs: allowing clients to take a specific view on currency movements
- Domestic positioning: watching closely into the August 2026 reporting season for signs of how Australian companies are managing cost pressures
Frequently asked questions
Will the RBA raise interest rates again in 2026?
Westpac and Morgans both expect two more interest rate rises in 2026, with the first likely in August and the second around the November RBA meeting, driven by continued concern about inflation passing through into consumer prices.
When does Westpac expect RBA interest rate cuts to begin?
Westpac has brought forward its RBA interest rate forecast, now expecting the first rate cut in 2027 rather than 2028, contingent on inflation returning towards the RBA's 2 to 3 per cent target.
Why did the ASX 200 rise despite expectations of further rate rises?
The ASX 200's 0.5 per cent rise on 10 July 2026 was driven primarily by strength in mining and resources stocks, following a rebound in global base metal prices, rather than the domestic rate outlook.
Is Telstra a buy after its share price fall?
Telstra's share price fall followed a network outage and associated reputational concerns, compounded by profit-taking after a period where the stock was arguably trading at a premium. Whether it represents a buying opportunity depends on individual circumstances and risk appetite, and this is general information only.
Should I be worried about more interest rate rises if I have a mortgage?
Higher interest rates affect borrowers directly, and the forecast of two more rises in 2026 is relevant to household budgeting. This article provides general market commentary only; speak with a Morgans adviser or your lender about how this may apply to your personal situation.
