The Reserve Bank of Australia left the cash rate unchanged at 4.35%, while signaling that inflation remains too high and is not expected to return to the midpoint of the target range until late 2027, despite signs that tighter policy is slowing the economy.

• The RBA held the cash rate target at 4.35% in a unanimous decision, judging monetary policy to be somewhat restrictive after three rate increases earlier in 2026 while it assesses how the economy evolves.

• Headline inflation remains too high, and trimmed mean inflation is described as elevated and little changed from the March quarter. The Bank expects inflation to remain above target for an extended period, with a return to around the midpoint of the target range only in late 2027.

• The Board said the Middle East conflict has had less impact on inflation than previously expected, but oil and related commodity prices remain above pre-conflict levels, with higher fuel costs increasingly being passed through into broader goods and services prices.

• Financial conditions have tightened following the year's three rate hikes, with higher money market rates, government bond yields, and an appreciating exchange rate, indicating monetary policy is transmitting through financial markets.

• Domestic demand is showing signs of moderation. Consumer spending growth is slowing gradually, housing prices have declined in some capital cities, and new housing loans have fallen noticeably, while business debt and investment remain strong.

• Labor market conditions have eased slightly more than expected in recent months, although the Bank noted that leading indicators point to only limited additional easing in the near term, suggesting the labor market remains relatively resilient.

• The RBA highlighted heightened uncertainty around both growth and inflation, noting that prolonged disruptions to global oil supply or an extended Middle East conflict could produce higher inflation and weaker economic activity than currently forecast.

• The Board reiterated that it remains prepared to raise the cash rate further if upside inflation risks materialize, emphasizing a data-dependent approach focused on returning inflation sustainably to target while supporting full employment.

• Statement on Monetary Policy - August 2026

The Reserve Bank of Australia held the cash rate unchanged at 4.35% in June 2026, as inflation remains elevated and growth shows signs of slowing following prior tightening.

• The Board kept the cash rate target at 4.35% (0 bps change), with a unanimous decision, indicating a pause to assess the impact of earlier rate hikes.
• Inflation has remained elevated, with both headline and underlying measures described as still too high, reflecting persistent price pressures despite some recent easing in oil prices.
• Energy and related commodity prices remain above pre-conflict levels, and firms are increasingly passing through higher costs to consumers, suggesting ongoing inflationary pressure from input costs.
• Short-term inflation expectations have eased but remain higher than earlier in the year, indicating some moderation but still elevated expectations relative to prior periods.
• Financial conditions have tightened following three earlier rate hikes, with higher money market rates, bond yields, and an appreciating exchange rate, contributing to slower economic momentum.
• Consumer spending growth has begun to slow and housing market conditions have softened, with prices declining in some capital cities, indicating the impact of tighter policy on demand.
• Labor market conditions are mixed, with a higher-than-expected unemployment rate in April but otherwise resilient indicators, suggesting some softening without broad deterioration.
• The outlook remains highly uncertain, with risks that inflation could be higher and growth lower depending on the persistence of energy supply disruptions and global uncertainty.
• The Board emphasized that inflation is likely to remain elevated for some time and remains prepared to tighten further if necessary, while monitoring the effects of prior policy adjustments.

The Reserve Bank of Australia raised the cash rate by +25 bps to 4.35% in March 2026, responding to elevated inflation risks driven by capacity pressures and higher energy costs.

• The Board increased the cash rate target to 4.35% (+25 bps), with an 8–1 vote, indicating broad support for tightening alongside limited dissent.
• Inflation picked up materially in H2 2025 and into early 2026, with capacity pressures and higher fuel and commodity prices contributing to renewed upward momentum.
• Higher fuel prices linked to the Middle East conflict are already adding to inflation, with firms beginning to pass through rising costs to goods and services prices, suggesting emerging second-round effects.
• Short-term inflation expectations have risen, reinforcing the assessment that inflation risks remain tilted to the upside and may persist above target.
• The updated baseline forecast sees underlying inflation peaking higher than previously expected before declining as demand growth slows and capacity pressures ease in response to tighter policy.
• Financial conditions have tightened, with higher money market rates, bond yields, and an appreciating exchange rate, though credit remains readily available to households and businesses.
• The outlook is subject to heightened uncertainty, with scenarios of prolonged conflict potentially leading to higher inflation and weaker growth through sustained energy price increases and reduced global demand.
• The Board emphasized that inflation is likely to remain above target for some time, justifying further tightening, while maintaining a data-dependent approach to future policy decisions.
• Statement on Monetary Policy - May 2026

The Reserve Bank of Australia raised the cash rate by +25 bps to 4.10% in March 2026, citing a renewed pickup in inflation pressures alongside stronger demand and rising global energy costs.

• The Board increased the cash rate to 4.10% (+25 bps), with a split decision (5–4 vote), indicating less unanimity around the need for tighter policy compared to prior meetings.

• Inflation has risen materially since H2 2025 after declining from its 2022 peak, with capacity pressures and higher fuel prices linked to the Middle East conflict contributing to the recent pickup.

• Short-term inflation expectations have increased, reinforcing the Board’s view that inflation risks are tilted to the upside and may remain above target for longer than previously anticipated.

• Private demand strengthened more than expected in late 2025, driven by stronger business investment while consumption came in below expectations, highlighting a shift in the composition of growth.

• Labor market conditions remain tight, with unemployment slightly lower than expected and underutilization measures still low, consistent with ongoing capacity pressures in the economy.

• Financial conditions have tightened somewhat, with higher exchange rates, money market rates, and bond yields, though credit remains readily available and earlier rate cuts are still working through the economy.

• Housing market activity and prices increased strongly over the past year, though price growth has moderated at the start of 2026, suggesting some easing after a period of strength.

• The Board emphasized significant uncertainty tied to the Middle East conflict, noting risks of higher energy prices and potential impacts on global growth, while signaling that future policy will remain data dependent.

The Reserve Bank of Australia raised the cash rate by +25 bps to 3.85%, responding to renewed inflation momentum and stronger domestic demand pressures.

• Inflation has declined significantly from its 2022 peak but picked up materially in H2 2025, with the Board assessing part of the increase as linked to rising capacity pressures.

• Private demand growth strengthened more than expected, driven by higher household consumption and investment, alongside continued gains in housing activity and prices.

• Financial conditions eased over 2025, with credit readily available and earlier rate cuts still working through the economy, though money market rates, bond yields, and the exchange rate have risen more recently.

• Labour market conditions remain somewhat tight, with unemployment lower than expected and underutilisation measures staying low, consistent with firmer economic momentum.

• Wage growth has moderated from its peak, but broader wage measures remain strong and unit labour cost growth is still elevated, contributing to underlying inflation risks.

• The Board noted that stronger-than-expected demand growth combined with limited supply capacity could add further to inflationary pressures going forward.

• Global economic uncertainty persists, but recent growth and trade among major trading partners have surprised on the upside, limiting external drag on Australia’s economy.

The Reserve Bank of Australia kept the cash rate unchanged at 3.60% in its latest meeting, noting a firmer inflation backdrop and stronger private demand that call for a cautious policy stance.

• Inflation has eased sharply from its 2022 peak but has picked up recently, with the Board judging part of the rise as temporary while acknowledging signs of a more broadly based and potentially persistent uptick.

• Private demand continues to strengthen, supported by rising consumption and investment, while housing activity and prices are also picking up, contributing to renewed momentum in domestic activity.

• Financial conditions have eased since early 2025, with credit readily available and earlier rate cuts still passing through to demand, though money market rates and bond yields have risen more recently, creating mixed financial signals.

• Labour market conditions remain somewhat tight, even as unemployment has gradually increased and employment growth has slowed; underutilisation rates remain low and many firms still report difficulty hiring.

• Wages growth has moderated from its peak, but broader measures still show solid increases and unit labour cost growth remains high, adding to the Bank’s vigilance on underlying inflation pressures.

• Domestic momentum has been stronger than expected, especially in the private sector, raising the risk of renewed capacity pressures if strength persists.

• Global risks remain significant but have not materially harmed growth among Australia’s major trading partners, reducing external drag for now.

• The Board judged that upside risks to inflation have increased, and with uncertainty around persistence, it opted for caution, emphasizing data dependence and a continued focus on achieving price stability and full employment.

The Reserve Bank of Australia kept the cash rate unchanged at 3.60% in November 2025, citing stronger-than-expected inflation and ongoing tightness in the labour market, while acknowledging signs of continued recovery in private demand and housing activity.

• Trimmed mean inflation rose +1.0% QoQ and +3.0% YoY in Q3 (up from +2.7% YoY in Q2), exceeding expectations in the August Statement and suggesting more persistent inflation pressures than previously assessed.

• Headline inflation climbed to +3.2% YoY, boosted by the end of electricity rebates, higher fuel costs, and rising housing construction prices.

• The unemployment rate increased to 4.5% in September (from 4.3% in August), with employment growth slowing slightly more than anticipated, though indicators such as job vacancies and underutilization still point to residual labour market tightness.

• Private demand continued to recover, supported by easier financial conditions and rising housing prices, with credit availability remaining strong for households and businesses.

• GDP growth is expected to stabilize near potential over the forecast period, while capacity pressures are projected to remain slightly above the August outlook due to resilient demand and limited slack.

• The RBA’s central forecast sees underlying inflation staying above the 2-3% target range through mid-2026 before easing to around 2.6% in 2027.

• Global growth has been more resilient than expected, though downside risks persist from tariffs, geopolitical uncertainty, and potential shifts in global financial conditions.

• The Board reaffirmed its commitment to price stability and full employment, noting that the recent easing in financial conditions and stronger inflation warranted a cautious approach to further rate adjustments.

• Statement on Monetary Policy: November 2025

The Reserve Bank of Australia kept the cash rate unchanged at 3.60% in September 2025, citing signs of stabilizing demand, easing financial conditions, and still-elevated uncertainty in the domestic and global outlook.

• Both headline and trimmed mean inflation remained within the 2–3% target range in Q2, though partial data suggest Q3 inflation could be higher than expected in August.

• Private demand has strengthened, with household consumption and housing market activity recovering as real incomes rise and credit conditions remain supportive.

• The unemployment rate held steady at 4.2% in August, while employment growth slowed slightly more than anticipated; underutilisation remains low.

• Wage growth has eased from earlier peaks, but weak productivity continues to keep unit labour costs high.

• Global risks remain elevated, with U.S. tariffs and trade policy still weighing on growth expectations despite reduced risk of extreme outcomes.

• The Board judged that maintaining the current rate was appropriate given improving private demand, still-tight labour conditions, and uncertainty about inflation persistence.

The Reserve Bank of Australia cut the cash rate target by 25 bps to 3.60% in August 2025, bringing total easing this year to 75 bps as underlying inflation trends toward the 2–3% target midpoint.

• Trimmed mean inflation slowed to 2.7% YoY in Q2 (from 2.9% in Q1), while headline inflation eased to 2.1% YoY, in line with forecasts.
• The unemployment rate averaged 4.2% in Q2, up from earlier lows, though underutilisation remains low and labour availability is still a constraint for some employers.
• Wage growth has eased from peak levels but remains elevated relative to weak productivity, keeping unit labour costs high.
• Global uncertainty remains elevated despite some clarity on US tariffs; trade policy is expected to weigh on global activity and Australian inflation.
• The Board cited risks to consumption growth and labour market conditions but remains prepared to adjust policy if international or domestic developments materially alter the outlook.
• Statement on Monetary Policy

The Reserve Bank of Australia held its cash rate target steady at 3.85% in July 2025, pausing after two earlier cuts as it waits for more confirmation that inflation is sustainably heading to target.

• Headline and trimmed mean inflation were at or near the 2–3% target range in Q1, but recent CPI data were “slightly stronger than expected.”
• The RBA noted progress in domestic demand, real household incomes, and easing financial stress, but flagged risks from weak productivity and unit labor cost pressures.
• Labour market conditions remain tight, with low underutilisation and continued hiring constraints, though wage growth has softened from peak levels.
• Global uncertainty remains high due to unresolved US trade policy and possible delays in business and consumer spending.
• The vote to hold rates was split (6 in favor, 3 against), and the RBA reaffirmed its data-dependent stance, prepared to respond if inflation or growth diverge materially from expectations.

The Reserve Bank of Australia cut its cash rate target for the second time this year at the conclusion of its May meeting in response to further progress on inflation and heightened uncertainty in the economic outlook. The market was surprised by the dual softening on inflation and growth and responded with a significant shift in the bond market.

Monetary Policy Decision

The Reserve Bank of Australia announced a 25 bps cut to its cash rate target, bringing it down to a two-year low of 3.85% as analysts broadly expected. The decision to cut was the second since the February 2025 meeting when the RBA decided to lower the rate from the 4.35% level it had established back in November 2023. February’s and today’s cuts were separated by a pause in early April, suggesting that the Reserve Bank Board is beginning a gradual cutting cycle to slowly pull back from what it sees as restrictive monetary policy.

The RBA’s decision to cut was driven by two key factors which are common factors across most of the major central banks, moderating inflation and intensifying uncertainty:

• Its first justification for a rate cut is based in the RBA’s observation that inflation continues to moderate. It points to data in Q1 2025 as “evidence that inflation continues to ease.” Forecasts released following the May meeting suggest inflation could rise over the next year to the top of the inflation target range, but the RBA expects underlying inflation to be “around the midpoint of the 2–3% range throughout much of the forecast period.”
• The other reasoning for a rate cut was the increase in uncertainty in the economic outlook due to “international developments.” The RBA dismisses some of the recent de-escalation between the US and China and says that there is still “considerable uncertainty about the final scope of the tariffs and policy responses in other countries.” The developments have led the RBA to have a weaker outlook for Australian growth, employment, and inflation. It is important to note that the Board sees trade uncertainty as a factor weakening inflation and not stoking it.

As expected, the RBA does not end its announcement with clear guidance on a path forward but rather the usual insistence that it will remain “attentive to the data.” That more neutral stance gives way to more dovish hints that it sees risks as more heavily weighted to the downside “given the heightened level of uncertainty about both aggregate demand and supply.” In fact, the Board wanted to make it clear that it considered “a severe downside scenario” in which “monetary policy is well placed to respond to international developments.” This suggests to me that the RBA will continue with a more gradual pace of easing, if inflation trends as expected, but it will accelerate easing if economic conditions demand it.

Statement on Monetary Policy

The May monetary policy decision coincided with the release of updated forecasts and commentary on the outlook that were last updated during the February meeting. This gap means the RBA has had a chance to digest the trade developments over the last three months and consider how it impacts the economic outlook. Here are some key results.

• The RBA broadly revised its forecast for growth over the next two years with the most significant downgrades in 2025. While it continues to see growth accelerating out of Q4 2024, the projection of that acceleration through Q2 2025 and through Q4 2025 have fallen -0.2 ppts and -0.3 ppts, respectively. It also sees weaker long-term baseline growth through 2027. The forecast update is almost entirely based on a deterioration in the outlook for the global economy which is expected to result in “softer global demand and weaker consumption momentum.” The RBA also notes that the forecast assumption includes a “lower market path for the cash rate” which means that the lowering of growth expectations was cushioned by the expectation of less restrictive policy.
• The RBA’s views of the labor market are the most optimistic. While it does have weaker growth expectations, it doesn’t necessarily see that translating to a significant rise in unemployment. The updated forecast for unemployment was only revised up 0.1 ppt through the end of 2025 with a higher baseline unemployment rate of 4.3% through 2027. This tight view of the labor market would give the RBA plenty of leeway to ease monetary policy if unemployment starts to trend against its forecasts.
• The inflation forecast saw the most significant changes from the February report to the May report. The projection of CPI inflation has shifted from moving significantly outside the target range in 2025 to 3.7% to staying just inside that range at 3.0%. The large adjustment is likely related to a lower energy commodity prices which have brough energy inflation expectations down sharply. The underlying inflation (trimmed mean inflation) outlook was broadly shifted down 1 ppt to 2.6% over the next two years. This downward revision comes from the expectation that “the trade conflict will be disinflationary for Australia and that the softer outlook for domestic growth will return the economy and labour market closer to balance.”

One further thing to note about the updated forecasts is that the assumptions used for the cash rate have moved significantly. This measure isn’t a forecast set by the RBA but, instead, are expectations derived from financial market pricing. It shows that the cash rate is expected to drop to 3.4% by the end of 2025 instead of the previous expectation of 3.6%. This roughly equated to an additional expected 25 bps rate cut this year than what was expected in February. At the current pace of cutting (one cut every two meetings), the RBA would reach 3.35% in the November 2025 meeting.