What was the RBA's latest cash rate decision, and how does it reflect its current monetary stance?

The Reserve Bank of Australia raised its cash rate to 4.35% from 4.1%, marking its third consecutive hike and fully unwinding last year’s easing cycle; this decision underscores the RBA’s determination to tackle stubborn inflation and reaffirms its outlier status globally, as it prioritizes its 2–3% inflation target above all else, with the board stating it ‘will do what it considers necessary’ to achieve price stability and full employment.

How does the RBA’s latest inflation forecast compare to its previous outlook, and what key assumption underpins the revision?

The RBA revised its inflation forecast upward for the near term—trimming mean inflation is now expected to rise to 3.8% in June—while projecting a gradual decline to 3.5% in December, 3.1% in mid-2027, and near the 2.5% target midpoint by end-2027; this updated profile is based on the assumption of a higher cash rate peak of 4.7% over the forecast horizon, up from the February projection of 4.3% in December 2027.

RBA Delivers Third Straight Rate Hike, Cementing Outlier Status

May 4, 2026

The Reserve Bank of Australia raised its key interest rate to 4.35%, citing stubborn inflation exacerbated by soaring energy prices due to the US-Iran conflict. This aggressive tightening distinguishes Australia from global peers while impacting manufacturing and consumer confidence.

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