Welcome to our coverage of the RBA rates announcement for May 2026.<\/p>\n
The RBA has hiked interest rates to 4.35% in a largely expected move following last week\u2019s significant headline inflation spike.<\/p>\n
Stay tuned as RBA governor Michele Bullock addresses the media, as well as more economist insights.<\/p>\n
Jump to key updates<\/p>\n
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Many economists expect RBA governor Michele Bullock to announce another cash rate hike in May. Picture: Martin Ollman<\/p>\n
RBA governor: \u2018I worry about employment\u2019<\/p>\n
4:12 pm<\/p>\n
Governor Michele Bullock has pushed back on suggestions the bank may not be giving equal weight to both parts of its dual mandate of price stability and full employment, explaining the importance of one meeting one objective can sometimes outweigh the emphasis on the other.<\/p>\n
\u201cI do worry about unemployment,\u201d Ms Bullock said in her post-rate hike press conference this afternoon. \u201cI worry about it for people who are paying mortgages because the best way for them to continue to meet their commitments is to have a job.\u201d<\/p>\n
Ms Bullock added: \u201cQuite apart from that, having a job is really important for people\u2019s self-worth and self-esteem \u2013 there are good reasons we don\u2019t want unemployment rising too much.<\/p>\n
\u201cWe still see employment growing, it just might mean it\u2019s taking a little longer for people to get jobs. If we can keep employment growing, it is the most positive thing we can do.\u201d<\/p>\n
\u2018Very tough time\u2019 expected for the rest of the year, RBA warns<\/p>\n
3:58 pm<\/p>\n
All Australians \u2013 not just those with mortgages and debt \u2013 should gear up for a \u201cvery tough time\u201d in 2026 when it comes to household finances, governor Michele Bullock has warned.<\/p>\n
Responding to media questioning following the bank\u2019s third consecutive cash rate hike this afternoon, Ms Bullock confirmed Australia is \u201cstaring down the barrel\u201d with high inflation \u201churting immensely\u201d.<\/p>\n
\u201cIt\u2019s hard and there\u2019s nothing we can do about the shock with all prices and interest rate rises will not do anything about that,\u201d she said. \u201cWe are going to see inflation peak, probably in June. It will then come down, if oil prices decline.<\/p>\n
\u201cEven if the conflict is resolved quite quickly, the effects are going on for the rest of the year and the oil price does not get back to where it was pre-war, so we are still in a worse position in terms of the costs to society.<\/p>\n
“It is a very tough time.”<\/p>\n
RBA: Spending must slow down<\/p>\n
3:44 pm<\/p>\n
Governor Michele Bullock has called on both the government and households to limit spending as the fight to control inflation in Australia intensifies.<\/p>\n
Addressing media following the bank\u2019s decision to hike the cash rate to 4.35% today, Ms Bullock said the extent to which the government is demanding goods and services is adding to demand.<\/p>\n
\u201cWhen inflation is already too high and the economy is facing capacity pressures, it doesn\u2019t take much additional spending to make the job of returning inflation to target more challenging,\u201d she warned.<\/p>\n
\u201cThe ability of the economy to supply the goods and services being demanded including by the government and the private sector \u2013 was outstripping the ability of the economy to supply it.<\/p>\n
\u201cI understand this is a really difficult time for households, but we must get on top of inflation now before it gets away from us. This means spending will need to grow more slowly for a time to help restore the balance between demand and supply.\u201d<\/p>\n
RBA governor set for tough media questioning<\/p>\n
3:29 pm<\/p>\n
Governor Michele Bullock is set to address the media shortly, providing a closer look into board members\u2019 discussions ahead of this afternoon\u2019s decision to hike the cash rate once again.<\/p>\n
Ms Bullock will likely speak about global volatility and the continued difficulties the bank faces trying to accurately forecast, as well as shed light on why some board members were pushing for a rate hold this month instead.<\/p>\n
A breakdown of the board\u2019s short- and medium-term economic outlook following the decision to tighten further is also expected, along with questions from journalists on when the board will have a clearer picture of the trajectory of inflation.<\/p>\n
Fast-evolving pressures out of the Middle East are expected to be the focal point of journalists\u2019 questions, along with recent commentary from RBA deputy governor Andrew Hauser about the government support he has suggested it is lacking when it comes to cash rate decisions.<\/p>\n
Read more: Cost of living crunch: Aussies demand action on housing and energy costs<\/a><\/p>\n Latest RBA inflation forecasts revealed<\/p>\n 3:13 pm<\/p>\n Headline inflation is not expected to drop down into the 2-3% target range until mid 2027 at the earliest, the RBA has confirmed, with underlying inflation expected to take even longer.<\/p>\n \u201cInflation was already too high before the Middle East conflict and increased fuel prices have pushed it up further,\u201d the RBA said.<\/p>\n A new baseline forecast accompanying today\u2019s rate hike confirms underlying inflation will peak higher than the bank had previously forecast, but timelines are reliant on the conflict in the Middle East being resolved soon, as well as the continued drop in fuel prices. Underlying inflation does not consider the most volatile price highs or lows, meaning it is the most accurate measure of inflation in the economy.<\/p>\n \u201cThere are materially heightened uncertainties about the outlook for domestic economic activity and inflation,\u201d the RBA said. \u201cWith the conflict in the Middle East continuing, there are plausible scenarios where inflation is higher and activity lower than envisaged.\u201d<\/p>\n RBA says worst inflation effects yet to come<\/p>\n 2:57 pm<\/p>\n The Reserve Bank has confirmed its latest interest rate hike is centred around its concerns that inflation \u2013 currently at a near three-year high \u2013 is yet to have its full impact in Australia.<\/p>\n \u201cHigher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly,\u201d the RBA said. \u201cThis inflation impulse is in addition to the high inflation recorded around the start of 2026.\u201d<\/p>\n In a statement accompanying the decision to increase the cash rate today for a third consecutive time, it was revealed eight of nine monetary policy board members voted for a hike.<\/p>\n \u201cA longer or more severe conflict could put further upward pressure on global energy prices,\u201d the statement read. \u201cThis would push up near-term inflation and could also increase inflation further out as these costs are passed through and if price rises get built into longer term inflation expectations.\u201d<\/p>\n What the RBA\u2019s rate rise will mean for your mortgage<\/p>\n 2:42 pm<\/p>\n The RBA\u2019s announcement that the cash rate has increased to 4.35% could have an impact on home loan repayments as early as the end of this month, depending on lender repayment cycles.<\/p>\n Mortgage Choice has calculated the extra amount that borrowers with various mortgage levels will soon need to pay, if their lender passes on today\u2019s cash rate hike.<\/p>\n The figures are rounded to the nearest $10 for ease and assume a starting rate of 6.26%.<\/p>\n Outstanding home loanCurrent monthly repaymentsMonthly repayments with a hikeMonthly extra costAnnual extra cost$1,000,000$6170$6330$160$1920$750,000$4630$4750$120$1440$500,000$3090$3170$80$960$250,000$1540$1580$40$480<\/p>\n Borrowers with fixed rates will not see any change from today\u2019s rate hike but may face higher variable rates if their fixed term is set to expire shortly and they choose not to lock in once again.<\/p>\n Read more: The $5,600 cost facing homebuyers as investors eye their next move<\/a><\/p>\n RBA hikes the cash rate to 4.35%<\/p>\n 2:30 pm<\/p>\n The Reserve Bank has increased the cash rate to 4.35% in a largely expected move following last week\u2019s significant headline inflation spike. This marks the third consecutive hike from the bank and officially cancels out the triple rate easing homeowners enjoyed last year.<\/p>\n Borrowers are in for a bumpy ride now, with interest rates back to the same conditions as 2024. Cost of living pressures \u2013 already mounting throughout March and April \u2013 are set to continue into the winter as war in the Middle East continues, choking global oil availability and disrupting vital supply chains.<\/p>\n Households are also inline for higher minimum mortgage repayments, with lenders expected to pass on today\u2019s cuts and business and operational cost increases bite.<\/p>\n This was the board\u2019s third meeting for 2026, concluding its two-day deliberations. A deeper dive into the context around the board\u2019s decision is expected in an accompanying statement in the next few minutes, along with latest expectations on how inflation, growth, and labour market conditions are faring.<\/p>\n Markets pricing in an interest rate hike today<\/p>\n 2:16 pm<\/p>\n Market expectations for an interest rate rise have been consistently high over the last two weeks, with the latest data from the Australian Stock Exchange showing there was a 69% expectation for a rate increase as of Friday. Adding a further 0.25% to the cash rate will bring it to 4.35%.<\/p>\n While expectations for another rate hike have remained relatively stable throughout April, it\u2019s a less confident percentage compared with earlier last week before the most recent inflation statistics were published.<\/p>\n While inflation is too high, the inflation figure came in below economist forecasts, and underlying inflation has not ticked upwards since December. At 3.3%, the trimmed mean inflation number \u2013 which strips out fuel price volatility in its calculation \u2013 is still well above the RBA\u2019s 2-3% target range.<\/p>\n The RBA Rate Indicator calculates the probability of a rate change using market-determined pricing from the ASX 30-Day Interbank Cash Rate Futures.<\/p>\n Read more: $3k hit \u2018at once\u2019: Inflation crushes any hope of rate relief<\/a><\/p>\n RBA battling against public expectations for inflation<\/p>\n 1:56 pm<\/p>\n Regardless of how the RBA decides to move the needle on the cash rate today, holding onto consumer confidence will likely be high on its priority list.<\/p>\n Speaking at an International Monetary Fund event earlier this month, assistant governor Sarah Hunter said the RBA\u2019s credibility depends on Australians believing that low, stable inflation is achievable.<\/p>\n \u201cFor me, it\u2019s all about what that does to the monetary policy trade-off,\u201d she questioned. \u201cHow much of an impact on inflation does it have, and inflation expectations, and how much of an impact on activity? Inflation expectations have to be the north star in all of this \u2013 the credibility of the institution.\u201d<\/p>\n Whether that confidence will hold as households face unusual supply shocks, and whether it will help prevent unexpected shifts in spending, remains uncertain. After acknowledging recent forecasting difficulties, a clearer view of consumption trends could go a long way to untangling the bank\u2019s predictions.<\/p>\n Read more: RBA battles for credibility ahead of first major inflation test<\/a><\/p>\n Third consecutive rate hike reverses 2025 easing<\/p>\n 1:43 pm<\/p>\n This afternoon could well mark a full circle for Australia\u2019s rates cycle if the Reserve Bank tightens policy yet again. It will be unchartered waters for many Aussies in the property market, with 2010 marking the last time the bank both cut and raised rates within one year.<\/p>\n After easing policy in 2025 to gradually bring down inflation, the RBA is now on the edge to undoing that shift entirely. A stagflation-style combination of high inflation, continued spending and resilient employment continue to complicate the economy outlook.<\/p>\n Scrutiny is expected to be on both the RBA\u2019s timings and its communications, with households shouldering the full effects of volatile interest rates, going from three cuts to three hikes in just 13 months.<\/p>\n The last time Aussies experienced three rate hikes and three rate cuts within in that timeframe was during the initial post-Global Financial Crisis recovery period in late 2008 and 2009.<\/p>\n Read more: Inflation squeeze: Australia tipped to lag behind world in oil crisis recovery<\/a><\/p>\n Australia\u2019s four big banks anticipating an interest rate rise<\/p>\n 1:31 pm<\/p>\n Around 75% of Aussies with a mortgage hold their home loan with either Commonwealth Bank, ANZ, Westpac and National Australia Bank; all four are predicting a rate rise today.<\/p>\n There has been little movement from the banks over the last few weeks when it comes to forecasting, with hike expectations well and truly locked in amid continued economic uncertainty stemming from the Iran War.<\/p>\n CBA, ANZ and NAB are aligned in expecting a prolonged period with rates on hold after today, a forecast that will see households returning to higher rates at the norm.<\/p>\n Westpac has the most hawkish view and is the outlier of the four, predicting a rate rise today will be the first of a further three consecutive hikes. Westpac chief economist Luci Ellis made the grim call at the end of last month, citing concerns over the accessibility of the Strait of Hormuz as the key factor.<\/p>\n Read more: RBA nightmare as 90pc of banks hike mortgage rates<\/a><\/p>\n Home price growth cooling since March hike<\/p>\n 1:14 pm<\/p>\n National home prices dipped in April, marking a turning point for Australia\u2019s strong property market and the first drop for this year.<\/p>\n Two consecutive rate cuts dampened borrower confidence last month, while rising inflation is also constricting borrowing powers and pricing would-be buyers out of the market. For the second month in a row, unit prices fared better than house prices, suggesting a move towards more affordable properties.<\/p>\n National home prices dropped 0.1% over the month, reducing the national median home value to $910,000. Despite this, prices are still 8.5% higher than they were 12 months ago.<\/p>\n Sydney (-0.5%) and Melbourne (-0.3%) were the only capitals to see price declines in April, while the nation\u2019s second cheapest capital, Hobart, saw the highest growth with 0.3%. Brisbane, Perth and Adelaide recorded price growth of 0.2%, while Darwin saw an 0.1% uplift and prices in the Australian Capital Territory remained flat.<\/p>\n Read more: PropTrack Home Price Index \u2013 April 2026<\/a><\/p>\n RBA pushing government for support on interest rate decisions<\/p>\n 12:59 pm<\/p>\n The Reserve Bank\u2019s traditional tight-lipped approach to handling questions around its relationship with the government has taken another turn in recent weeks as the 2026 Federal Budget approaches.<\/p>\n Speaking in New York on 14 April, deputy governor Andrew Hauser said the Reserve Bank needs \u201crock solid support from governments\u201d as it makes hard decisions over how to reign in inflation, while also dealing with the global oil crisis.<\/p>\n \u201cYou need to be very clear what you can\u2019t do, because people are maybe thinking that monetary policy can solve everything,\u201d he said. \u201cWe have to be clear that what monetary policy can do, which is anchor inflation and inflation expectations.\u201d<\/p>\n The comments come off the back of a tense time for government and central bank relations, after governor Michele Bullock stated earlier this year that government spending, as a component of aggregate demand, was putting too much pressure on the economy.<\/p>\n Read more: RBA calls for \u2018rock solid\u2019 government support; says monetary policy \u2018can\u2019t solve everything\u2019<\/a><\/p>\n War in the Middle East continues to threaten inflation<\/p>\n 12:44 pm<\/p>\n Imported fuel costs feed directly into transport, logistics and supermarket prices in Australia, which has underpinned inflation \u2013 which was already too high ahead of the global fuel shock – in the lead up to today\u2019s monetary policy board meeting.<\/p>\n That means higher prices are sticking around longer than expected, even with policy measures like the February and March rate cuts, which should be making a noticeable impact dampening conditions.<\/p>\n It comes as global energy markets are continuing to react to the conflict in the Middle East, which is now in its tenth week. Supply fears are continuing to keep oil prices higher than usual, meaning the RBA will be looking to make swift moves to protect the economy from the risk of \u2018stagflation\u2019 (where high inflation and unemployment mix uncharacteristically with slow economic growth).<\/p>\n In a housing market already sensitive to both rate cuts and buyer sentiment, continuing Middle East conflict means an increased risk of mortgage rates remaining elevated throughout 2026.<\/p>\n Read more: \u2018Nightmare\u2019 inflation path: RBA warns of \u2018big income shock\u2019 and higher rates from oil crisis<\/a><\/p>\n Economist prediction: Another rate hike expected today<\/p>\n 12:32 pm<\/p>\n The realestate.com.au economist team have forecast another rate hike for today as the pressures from the Iran War continue to be felt by Australian households.<\/p>\n Following last week\u2019s uncomfortably high headline inflation data, pressure will be on the Reserve Bank to use its lever of interest rates to try and take back some control.<\/p>\n Headline CPI increased over the 12 months to March, jumping to a whopping 4.6%, up from February\u2019s 3.7% reading.<\/p>\n \u201cThis represents the highest level for inflation seen since September 2023 and is well above the Reserve Bank’s target range of between 2-3%,\u201d REA Group senior economist Anne Flaherty warned. \u201cThe figures increase the chances the Reserve Bank will increase the cash rate.\u201d<\/p>\n While the RBA prefers to judge the state of the economy off the trimmed mean figure \u2013 the inflation reading that leaves out the month\u2019s biggest price shocks \u2013 Ms Flaherty said conditions did were not promising enough to prevent another hike.<\/p>\n Read more: Shock rate warning: RBA tells Aussies to brace for 5% inflation by June<\/a><\/p>\n Surging inflation likely to back RBA into a corner<\/p>\n 12:13 pm<\/p>\n Inflation is moving swiftly out of control in Australia yet again, with new figures from the Australian Bureau of Statistics last week confirming both headline and trimmed mean inflation are well outside the RBA\u2019s 2-3% target range.<\/p>\n While headline inflation hit a near three-year high of 4.6% over the year to March, the RBA also looks at what\u2019s called the \u2018trimmed mean\u2019 to make interest rate decisions.<\/p>\n The trimmed mean is less volatile and in the case of March, discounts fuel price changes. Annual trimmed mean is sitting at 3.3%, the same as where it was in February. With trimmed mean outside the target range but remaining steady for a fourth month in a row, could households be spared the extra pressure of a hike? Yes, but likely not.<\/p>\n Communications from the bank in recent weeks make it clear how much of a threat it considers high inflation is in the long term.<\/p>\n Interest rates are the only measure the RBA has in its arsenal to try and rein in inflation in, so a rate hike today is highly expected.<\/p>\n