CSL Ltd (ASX: CSL) shares are down 1.4% in Wednesday afternoon trade. At the time of writing, the beaten-down biotech stock is trading at $139.13 per share.

Today’s decline means the shares are now down 19% year to date and 44% over the year.

The company has faced significant headwinds recently, including lacklustre financial results, a shock CEO exit, and a surprise restructure announcement. CSL also downgraded its FY26 revenue and profit growth guidance in October, pushing its share price further south.

While the past 18 months have been filled with doom and gloom, I still see some great potential in CSL going forward. 

Here are three reasons why adding CSL shares to your portfolio today could be a great idea.

1. There is huge and recurring demand for its products

CSL is an Australian-based global biotechnology company that develops and delivers biotherapies and vaccines. At the core of its business are its plasma-derived medicines, including immunoglobulins, albumin, and clotting factors. The company’s blood plasma division dominates the market for rare blood disorders and immunoglobulin products. 

Demand for plasma therapies is strong and growing, driven by recurring demand, limited competition, and supply constraints. Recent reports indicate that demand for blood plasma derivatives was around 145 million litres in 2025 and is expected to increase significantly in 2026. The market was valued at $52.16 billion in 2025, and by 2033, it is expected to reach $104.30 billion.

2. The business is building momentum

CSL is one of the world’s largest biotech companies, and despite short‑term headwinds, earnings momentum is expected to keep building. CSL has experienced periods of double‑digit profit growth, and its forecasts underpin a longer‑term recovery.

Sequoia Wealth Management’s Peter Day, who has a buy recommendation on CSL shares, recently pointed out that the company has posted a significant increase in revenue during the past three years and delivered earnings growth that is compounding at double-digit rates.

3. Analysts are very bullish

Analysts are bullish about the outlook for CSL shares over the next 12 months. Many say the investor sell-off was way overdone and unwarranted.

TradingView data shows that 12 out of 18 analysts currently have a buy or strong buy rating on the stock. The average target price is $207.6, which implies a 50% upside at the time of writing. However, some think the share price could storm even higher, by 95% to $270.01 a piece.

The post 3 reasons to buy CSL shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Supermarket giants Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) have had a rivalry spanning decades. From grocery prices to product lines, revenue growth, and even share prices, the two retailers compete for nearly everything with Australia’s supermarket and grocery retail sector.

Shares of both supermarkets have been neck and neck for some time, but so far in 2026, Woolworths is storming ahead.

Here’s what has happened, and what to expect next.

What’s happened to Woolworths shares this year?

Woolworths shares are down 0.25% in Wednesday afternoon trade, to $35.74 a piece. Despite the blip, the supermarket’s shares have stormed 21% higher so far in 2026. They’re now up 27% over the year.

It’s welcome news for investors after the retailer’s shares nosedived nearly 20% in August last year after it posted a disappointing FY25 result. The share price dropped to an all-time low in mid-October. It was saved from any further declines following Woolworths’ positive first-quarter sales update late last year.

The company posted its half-year FY26 results in late February, revealing a 3.4% increase in sales, a 14.4% increase in earnings before interest and tax (EBIT), and a 16.4% surge in net profit. 

Investors were thrilled, and the share price soared 15% to an 18-month high. Since then, Woolworths shares have remained relatively stable.

Analysts project the momentum to continue throughout the second half of FY26. It looks like the business is beginning to reap the rewards of its turnaround strategy implemented last year.

What’s happened to Coles shares this year?

Coles shares are down 0.3% at the time of writing, to $21 a piece. It’s been a pretty volatile start to 2026 for the supermarket giant, with its share price wildly fluctuating. The share price is now down 1.7% for the year to date and 13% higher over the past year.

Unlike Woolworths, Coles’ growth strategy paid off late last year. The retailer experienced a surge in its value in 2025, particularly following its FY25 results announcement in August. 

As Coles moved into 2026, the tide began turning, and positive sentiment from last year lost momentum.

The decline picked up pace after Coles’ half-year FY26 results revealed broadly strong growth figures. This included a 3.2% increase in sales revenue and a 7.8% increase in EBITDA. But these were unwound by a 11.3% decline in net profit. 

The result missed expectations, failed to match rival Woolworths’ results, and spooked investors.

But analysts generally expect Coles to recover through 2026 after its strategic cost-saving initiatives begin to flow through to its financials.

Are Woolworths and Coles shares a buy, sell, or hold?

Despite the latest share movements out of the two supermarkets, analysts aren’t expecting Woolworths shares to outperform Coles for much longer.

TradingView data shows that most analysts (12 out of 18) have a hold rating on Woolworths shares, with a maximum target price of $39. That implies a potential 9% upside at the time of writing.

However, data shows that analysts are much more bullish on Coles shares. Of 18 analysts, 15 have a buy or strong buy rating on Coles shares, with a maximum upside of $24.90. That’s a 19% upside from the current trading price.

It looks like the supermarket war isn’t over yet.

The post Woolworths shares are storming ahead of Coles this year: Are the supermarket giants a buy, sell, or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Silver prices have continued to move lower this week, with the precious metal now trading at around US$79 per ounce. That leaves silver down roughly 8% over the past 5 trading sessions, marking a sharp pullback from recent highs above US$80.

The decline comes after a strong run earlier in 2026, where silver had surged on the back of geopolitical tensions and rising demand for safe haven assets. However, recent data suggests that momentum has started to fade as market conditions shift.

Silver drifts toward multi-week lows

According to Trading Economics, silver recently fell to near a 1-month low as investors reassessed inflation risks and the outlook for interest rates.

Despite the ongoing war in the Middle East, markets have begun to stabilise. While earlier disruptions had pushed investors into precious metals, recent sessions have seen a partial unwind of those flows.

At the same time, the US dollar has remained firm, while US Treasury yields have also stayed elevated.

Central bank expectations remain steady

Another key factor has been shifting expectations around monetary policy. Investors are increasingly pricing in a scenario where the US Federal Reserve keeps interest rates steady for longer.

Recent commentary and market pricing indicate that rate cuts may not come as quickly as previously expected. This has supported the US dollar and reinforced pressure on precious metals.

Other major central banks, including the European Central Bank and Bank of England, are also expected to maintain their current policy settings in the near-term.

ETF flows and positioning soften

Recent data also points to weaker investor positioning. Reports indicate that global silver ETF holdings have declined in recent sessions, with outflows reversing part of the inflows seen earlier in the year.

Futures positioning has also eased. Non-commercial net long positions in silver have pulled back from recent highs, showing less bullish positioning from traders.

In addition, margin requirements for precious metals futures have increased, which has reduced leverage and speculative activity.

Industrial demand remains a key support

Despite the recent price weakness, silver continues to be supported by its role as an industrial metal. Demand from sectors such as electronics and solar energy remains a core component of the market.

According to industry data, silver is still expected to face a supply deficit in 2026, with strong consumption from manufacturing and technology applications.

However, in the short-term, macroeconomic factors appear to be having a greater influence on price movements.

What this means for ASX investors

The pullback in silver prices has also flowed through to listed investment products.

The Global X Metal Securities Australia Ltd (ASX: ETPMAG), which provides exposure to physical silver, is currently trading at $102.78, down 3.70%.

The ETF has also declined over the past week, broadly tracking movements in the underlying silver price.

While silver remains higher over the longer term, the recent decline shows how quickly sentiment can shift in commodity markets.

The post Silver slides again as momentum fades. Should investors take profits now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Electro Optic Systems Holdings Ltd (ASX: EOS) shares fell around 16% yesterday after the company revealed that senior executives had exercised their share options and signalled plans to sell some of their shares.

For a company with a share price that has risen 7 times over the past year, the reaction was sharp, but not entirely unexpected.

Whilst EOS shares have rebounded today, the pattern will look familiar to investors. DroneShield Ltd (ASX: DRO) followed a similar path, starting off with a powerful geopolitical tailwind, a rapid rise in the share price, and then volatility as insiders began to sell.

So what can investors learn from this?

The work happens before the rally

Before their share prices surged, both EOS and DroneShield had significant periods of underperformance. EOS shares, for example, were down 70% from March 2021 to May 2025.

At some point, there was an inflection point, and the fortunes of these companies changed. This highlights the importance of constantly turning over ideas, understanding what a company does, and critically assessing what could go right and what could go wrong as the market environment evolves.

The stock market is dynamic, and it can throw up opportunities from unexpected places. Spotting those opportunities when they emerge requires you to put in the work before it’s obvious who the winners are.

You need a risk management plan

Most investors spend time thinking about what to buy, but far fewer think about how to manage a position as it evolves.

Risk management takes different forms, but it starts with position sizing. If you bought EOS or Droneshield shares, was it 5% of your portfolio or a 10% position? Whatever it is, that decision matters more than most people realise, especially with volatile small caps.

But it doesn’t stop there.

What happens if that position performs exceptionally well? A 10% position can quickly become a much larger part of your portfolio. That’s a great problem to have, but at that point, the question shifts from “Is this a good investment?” to “Is this too much allocation to one idea?”

Some investors decide to sell a portion and trim along the way. Others rebalance back to a target weight, e.g. back to 10%. And others simply do nothing and let it ride.

There’s no single right approach; it depends on your assessment of the company’s prospects, plus your own objectives, time horizon, and risk tolerance.

The key is having a plan before you need it.

Because when a stock is moving quickly (up or down), decisions made in the emotion-fueled moment are rarely the best ones.

Expect insider selling

Naturally, investors will want management to stay invested all the way through, but that’s not what typically happens.

At EOS, management exercised options at prices as low as 50 cents, with the stock recently trading around $10. With millions of dollars on the table, most people in that situation would likely choose to sell a portion of their stake, perhaps to buy a house (or a better house!).

Investors may prefer management to stay fully invested, but in reality, selling is what usually happens.

You should expect it and the volatility that comes along with it, then position accordingly.

Fundamentals and valuation still matter

A falling share price doesn’t automatically mean the business is weakening, but also a growing business doesn’t automatically mean it’s a better investment idea.

It’s entirely possible for a company’s fundamentals to improve meaningfully (for example, doubling the expected value of its future cash flows) while the share price rises by 10x.

In that case, the business is stronger, but the investment opportunity may actually be less attractive.

That’s the distinction investors need to make, but admittedly, it’s easier said than done.

Foolish bottom line

Stocks like EOS and DroneShield can deliver exceptional returns, but those returns come with volatility. The advantage comes from doing the work early, managing risk as the position evolves, and understanding that price and value don’t always move in lockstep.

The post Electro Optic Systems just had its DroneShield moment. Here’s what investors should know appeared first on The Motley Fool Australia.

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Motley Fool contributor Kevin Gandiya has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and Electro Optic Systems and is short shares of DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For some investors, a stable dividend stream is the holy grail – the key is to invest in companies that can sustain their payouts going forward.

I’ve had a look at three companies which appear to fit the bill pretty well.

Let’s take a look.

Atlas Arteria Ltd (ASX: ALX)

This toll road company is exactly the sort of business that I think most dividend investors are searching for.

Infrastructure companies such as Atlas Arteria tend to have long-term, stable contracts, with good visibility out over potentially several years, especially on the cost front.

Atlas Arteria is currently paying a trailing dividend yield of 8.67%, which is high, but investors can take heart from what the company said when announcing its full-year results in February.

The company not only reaffirmed its final dividend of 20 cents per share but also said it would target future full-year distributions of at least 40 cents per share, “supported by free cash flow”.

While that’s not an ironclad guarantee, it’s a strong indication that the company will continue paying out strong returns.

Helloworld Travel Ltd (ASX: HLO)

Helloworld makes the list for both strong returns and potential upside in its share price.

Shaw and Partners issued a research note this week saying that strong traveller arrival and departure numbers for January boded well for the travel operator, and they set a price target of $2.80 on the stock, compared with $1.47 currently.

The broker is predicting a dividend yield of 7.5% for the current financial year, rising to 8.2% over the subsequent two years.

Helloworld shares have been sharply sold off since the conflict in the Middle East began, and are not far off their 12-month lows of $1.30.

Perpetual Ltd (ASX: PPT)

Financial stock Perpetual is paying a 7% dividend yield, and just this week announced the $500 million sale of its wealth business to Bain Private Equity, in a move that will simplify the business.

The company said the money raised would be used to retire debt and foster organic growth in its two remaining business divisions. This surely puts the company in a good position to maintain its dividend flows.

Macquarie had a look at the wealth deal this week and put out a research note to its clients forecasting a dividend yield of 7% this financial year, which would then fall to 6.7% in FY27 and 6.4% in FY28.

The analyst team at Macquarie also has a bullish share price target of $24.60 for the stock, compared with $15.99 currently.

The post These 3 ASX stocks are paying better than 7% dividend yields appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investors are facing fresh warnings that the economic fallout from the ongoing Middle East war could linger well after fighting ends.

Australian Prime Minister Anthony Albanese said the conflict may have a “long economic tail”, raising concerns about what could come next for global markets, inflation, and interest rates.

Let’s unpack what this could mean for investors.

Leaders warn the economic impact could last for years

According to The Australian, the Prime Minister said the current situation could create economic shockwaves similar to those seen after COVID and Russia’s invasion of Ukraine.

Albanese described the situation as another major disruption to the global economy during a decade already marked by shocks.

He warned that even if the fighting ends quickly, the economic effects could continue to flow through supply chains, trade routes, and energy markets.

One of the biggest concerns is oil.

The Middle East remains the world’s most important energy-producing region. Any disruption to shipping routes or oil production can quickly push prices higher.

Why markets are getting nervous

Financial markets tend to react quickly to geopolitical shocks, particularly those involving energy supplies.

Higher oil prices can make things more difficult for central banks such as the Reserve Bank of Australia (RBA), which has been trying to bring inflation back within its 2% to 3% target band.

If energy costs rise quickly, inflation may stay higher for longer. That could force central banks to keep interest rates elevated or even raise them again.

Policymakers have already warned that inflation risks remain tilted to the upside.

And this is one reason why investors are watching developments in the Middle East very closely.

What it means for the ASX 200

Despite the uncertainty, the S&P/ASX 200 Index (ASX: XJO) has held up relatively well so far.

At the time of writing, the index is up around 0.1% today to about 8,621 points.

However, the broader trend has been weaker.

Over the past month, the ASX 200 has fallen by almost 4%, reflecting growing caution among investors amid rising global risks.

The pullback highlights how sensitive markets remain to geopolitical developments and interest rate expectations.

Energy stocks have generally been among the beneficiaries when oil prices surge. But other sectors, such as technology, consumer discretionary, and property, often face pressure when borrowing costs remain high.

That mix of winners and losers is likely to continue if volatility persists.

What to watch next

The biggest factor now is how the conflict develops and whether it continues to disrupt the global energy supply.

Markets will also be watching oil prices closely. If crude prices push back well over US$100 per barrel, inflation fears could intensify quickly.

The key takeaway is that these types of world events rarely stay contained.

They tend to ripple through markets, supply chains, and central bank policy.

And if this latest crisis carries on, the effects could be felt on the ASX for some time yet.

The post Markets brace for the next shock as global tensions flare up appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

4DMedical Ltd (ASX: 4DX) shares are trading 2% higher in afternoon trade on Wednesday. At the time of writing, the shares are trading at $3.87 each. The shares are now down 14.10% year to date.

The decline might look concerning on the surface, but it has barely dented the company’s gains over the past 12 months. At the time of writing, 4DMedical shares are trading an enormous 950% higher than this time last year.

What has happened to the ASX tech stock’s shares?

4DMedical is a healthcare technology company that develops imaging software for healthcare providers to analyse airflow through the lungs. It helps identify and treat lung and respiratory diseases ranging from asthma to lung cancer.

The company saw its share price explode in 2025 after its flagship product, CT:VQ, received regulatory approvals. It was quickly implemented and adopted through partnerships and commercial contracts with healthcare organisations.

4DMedical has already signed contracts with hospitals and medical providers, primarily across the US. Stanford University, the University of Miami, Cleveland Clinic and UC San Diego Health have all rolled out the technology at their centres.

In short, 4DMedical moved from a research and development business trialling new technology, to a globally commercial business within a very short period of time.

There is no price-sensitive news out of the company to explain the softening share price in 2026. But after such an enormous price tally in 2025, it’s likely that investors are taking their gains off the table.

What’s next for the company in 2026?

Development and rapid adoption of the company’s technology also mean 4DMedical has smashed its milestone goals. 

In 2026, 4DMedical will focus on accelerating the rollout of its newly FDA-approved CT:VQ imaging product through more strategic partnerships and new contracts. 

Approvals have been secured in Canada and New Zealand. The company is now actively progressing commercialisation plans in Europe and Australia.

This month, 4DMedical was also added to the All Ordinaries Index (ASX: XAO) and the S&P/ASX 300 Index (ASX: XKO).

Is it too late to buy the ASX tech stock, or is there more upside to come?

Despite the strong rally over the past year and the 2026 sell-off, most analysts remain very bullish on the stock’s outlook.

TradingView data shows that two out of three analysts have a strong buy rating on the shares, while one has a strong sell stance on the stock.

The maximum target price is $4.90, implying another 27% upside for investors at the time of writing. 

The post Up over 900%: Is it too late to buy this incredible ASX tech stock? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a modest gain. At the time of writing, the benchmark index is up 0.2% to 8,631.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Brightstar Resources Ltd (ASX: BTR)

The Brightstar Resources share price is down 4% to 41.7 cents. This appears to have been driven by the gold miner issuing almost 245 million new shares this morning. Last month, Brightstar Resources announced a strategic $180 million capital raising to fund a material increase in production. Brightstar’s managing director, Alex Rovira, said: “To emerge with all the equity funding required to build our Goldfields Hub, as well as a substantial budget that enables accelerated pre-development activities at Sandstone and to fully fund Sandstone to FID, is an amazing opportunity for Brightstar that enables us to maintain the momentum of de-risking our portfolio of advanced gold projects.”

EQ Resources Ltd (ASX: EQR)

The EQ Resources share price is down 6.5% to 29 cents. This is despite the tungsten producer releasing an investor presentation this morning. Within the presentation, management stated: “EQR is one of the largest producers of tungsten outside of restricted countries, with spot-priced offtake agreements in place, supplying Europe, North America and Asian markets.”

Novonix Ltd (ASX: NVX)

The Novonix share price is down almost 5% to 26.2 cents. This has been driven by news that the battery technology company’s NASDAQ-traded shares could be delisted due to its weak share price. It advised: “The notice states that, for the previous 30 consecutive business days, the closing bid price of the Company’s American Depositary Receipts (ADRs) listed on the Nasdaq has been below the minimum requirement of US$1.00 per ADR. In accordance with Nasdaq Listing Rules, the Company has 180 calendar days from the date of the notice to regain compliance (compliance period). To regain compliance, the closing bid price of the Company’s ADR’s must be at least US$1.00 per ADR for a minimum of 10 consecutive business days during the compliance period.”

Pro Medicus Ltd (ASX: PME)

The Pro Medicus share price is down a further 2% to $125.40. This is despite there being no news out of the health imaging technology company. However, Pro Medicus’ shares have been under pressure this year amid concerns over AI disruption. This has seen the Pro Medicus share price lose over 40% of its value since the turn of the year.

The post Why Brightstar, EQ Resources, Novonix, and Pro Medicus shares are falling today appeared first on The Motley Fool Australia.

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Life360 Inc (ASX: 360) shares are charging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) location-sharing software developer closed yesterday at $18.94. In early afternoon trade on Wednesday, shares are changing hands for $19.55 apiece, up 3.2%.

For some context, the ASX 200 is up 0.2% at this same time.

Despite today’s welcome outperformance, the ASX tech stock remains down a sharp 39.8% since the opening bell sounded on 2 January.

Among the headwinds, Life360 shares have been caught up in the broader tech stock sell-off amid investor concerns that artificial intelligence (AI) could replace many of the services these companies currently offer.

Which brings us back to our headline question.

Should you buy Life360 shares today?

Baker Young’s Toby Grimm recently ran his slide rule over Life360 shares (courtesy of The Bull).

“Life360 is a leading family safety and location sharing platform operating across the US, UK and Australia,” he said.

Life360 released its results for the full 2025 calendar year on 3 March. Commenting on those results, Grimm noted:

The company delivered better-than-expected full year results in 2025, highlighted by subscription revenue increasing 33%. Hardware remains an important long term growth option, as it helps lock users into paid subscriptions.

Despite reporting solid growth metrics for 2025, Life360 shares crashed 17.6% on 3 March.

But Grimm doesn’t believe investors should sell their shares. Explaining his hold recommendation, he concluded:

We believe the magnitude of the recent share price decline has been excessive given the strength across most of Life360’s core subscription business. Accordingly, we remain comfortable holding this high quality, fast growing and profitable company at current levels.

What’s the latest from the ASX 200 tech stock?

As mentioned, Life360 shares plunged a sharp 17.6% on the day the company reported its full-year results.

On top of the 33% year on year lift in revenue to US$489.5 million that Grimm pointed out above, sales came despite the company achieving 105% growth in its adjusted earnings before interest, taxes, depreciation and amortisation EBITDA to US$93.2 million.

Commenting on the results on the day, Life360 CEO Lauren Antonoff said, “For the first time in company history, we achieved annual net income, reflecting both the fundamental strength of our freemium model and the operating discipline we’ve built over the past several years.”

As for the rapid advancement of AI, Antonoff added:

We are deep into the transition to become an AI-first company. Organization-wide active AI adoption has grown to over 95%, accelerating our execution and expanding what’s possible for families on our platform.

We see AI as an opportunity to accelerate our path and deepen our moat. Our core use case is durable because it is anchored in real people moving through the physical world, generating data that further deepens our advantage.

The post Down 40% in 2026, should you buy the big dip in Life360 shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360. The Motley Fool Australia has positions in and has recommended Life360. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Tuesday, as was widely expected, the Reserve Bank of Australia (RBA) delivered another blow to mortgage holders by increasing interest rates for the second month in a row.

The central bank lifted the cash rate by 25 basis points to 4.1% at March’s meeting.

The RBA explained:

A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025. While part of the pick-up in inflation is assessed to reflect temporary factors, the Board judged that the labour market has tightened a little recently and capacity pressures are slightly greater than previously assessed. Developments in the Middle East remain highly uncertain, but under a wide range of possible scenarios could add to global and domestic inflation.

In light of these considerations, the Board judged that inflation is likely to remain above target for some time and that the risks have tilted further to the upside, including to inflation expectations. It was therefore appropriate to increase the cash rate target.

What’s next for interest rates?

Last year, the RBA changed its meeting schedule from monthly to eight times a year.

One of the months that doesn’t have a meeting is April, which means the central bank has a bit of time to observe economic data, run its numbers, and ultimately make its decision on where interest rates are going next.

At present, the RBA Rate Indicator, which is based on the ASX 30 Day Interbank Cash Rate Futures May 2026 contract, suggests that there is a good probability of a rate increase at the May meeting.

The RBA Rate Indicator currently sits at 57% in favour of an increase to 4.35%. If this proves accurate, it will mean three meetings in a row of hikes to interest rates, much to the dismay of borrowers.

Will the RBA hike?

Unfortunately, the economics team at Westpac Banking Corp (ASX: WBC) appears to believe that the market is onto something with its prediction.

Australia’s oldest bank believes the RBA will increase interest rates in May, before pausing at 4.35% for the foreseeable future.

Westpac’s senior economist, Mantas Vanagas, commented:

Domestically, focus was on the RBA – as anticipated, the central bank raised the cash rate by 25bp for the second time this year, bringing it to 4.10%. The narrow 5–4 vote in favour of tightening highlighted significant differences of opinion within the Monetary Policy Board, however, Governor Bullock clarified at the press conference that these differences concerned the timing of the hike, not the direction of policy. We continue to expect another interest rate increase in May, though it will likely depend on developments in the Middle East conflict.

After a rate hike in May, Westpac expects rates to stay at 4.35% until late 2027. It then expects rates to fall to 3.6% by March 2028.

The post Why the RBA could increase interest rates again in May appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• How many Westpac shares do I need to buy for a $10,000 annual passive income?
• 3 ASX dividend shares I’d buy instead of Westpac
• Here’s what Westpac says the RBA will do with interest rates next week
• Here’s what experts think will happen with the RBA interest rate this month

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.