- Decision
- Maintain
- Rate change
- 0 bps
- cash rate
- 4.35%
The Reserve Bank of Australia left the cash rate target unchanged at 4.35% on 16 June 2026, saying headline and underlying inflation remain too high and judging it appropriate to assess the effects of earlier rate increases and the impact of the global oil supply disruption on inflation and activity. After cutting the cash rate to 3.60% in August 2025, the Board raised it by 25 basis points in February, March and May 2026 to 4.35%. The Board said financial conditions have tightened this year, with money market rates and government bond yields up and the exchange rate appreciating. Domestically, inflation picked up materially in the second half of 2025 and has been lifted further by higher fuel prices and pass-through into other goods and services, while short-term inflation expectations have eased but remain above earlier-in-the-year levels; at the same time, consumer spending growth is slowing as expected, housing momentum has shifted with prices falling in some capital cities, unemployment was higher than expected in April, business investment growth is strong and credit remains readily available to households and businesses. The Board said uncertainties remain elevated, with the conflict in the Middle East still at an early stage of resolution, global oil supply problems likely to keep upward pressure on energy prices and inflation, and prolonged uncertainty posing downside risks to growth in Australia’s major trading partners and Australia. It said policy will remain data dependent and that it is prepared to increase the cash rate target further if required.
Rate evolution
From July 2025 to August 2026, the Reserve Bank of Australia’s cash rate target rose by a net 50 basis points to 4.35%, after an August cut and a pause through December gave way to three consecutive hikes from February, before the Board left the rate unchanged on 16 June and 11 August 2026. That early easing and the ensuing hold reflected substantial disinflation, with underlying inflation near the midpoint of the 2–3% range, while private demand recovered only gradually and the Board weighed weak productivity, high unit labour costs, tight labour conditions and elevated global uncertainty. By late 2025, however, the Board said underlying inflation had picked up, private demand and housing were strengthening and financial conditions had eased, shifting its language from more balanced inflation risks to a more cautious assessment of persistence and upside risk.
In subsequent decisions, it judged that stronger-than-expected private demand, greater capacity pressures, a tight labour market and fuel price increases linked to the conflict in the Middle East were likely to keep inflation above target for some time, with higher inflation expectations and possible second-round effects tilting risks to the upside despite heightened uncertainty and the possibility of weaker activity. Holding the cash rate target at 4.35% in June, the Board said headline and underlying inflation were still too high and that the disruption to global oil supply was adding to inflation and passing through to other prices, but it also noted tighter financial conditions, signs consumer spending was slowing as expected, a shift in housing market momentum and a higher-than-expected unemployment rate in April, and judged it appropriate to assess the effects of earlier increases and the oil supply disruption while remaining prepared to raise the cash rate target further if required. In August, the Board again held the rate at 4.35%, judging monetary policy somewhat restrictive and the economy to be slowing as expected, while noting that headline inflation remained too high, trimmed mean inflation was elevated and little changed, and capacity pressures and higher energy costs were likely to keep inflation high for some time, with upside risks warranting a further increase if they materialised.