At its meeting today, the Board decided to leave the cash rate target unchanged at
\n\t\t\t\t\t\t4.35\u00a0per\u00a0cent.<\/p>\n
Inflation picked up materially in the second half of 2025, and information since the beginning of
\n\t\t\t\t\t\tthis year confirms that some of the increase reflected greater capacity pressures. The latest data
\n\t\t\t\t\t\tshow that headline and underlying inflation are still too high. Oil prices have eased in recent
\n\t\t\t\t\t\tweeks, although energy and most related commodity prices remain higher than they were prior to the
\n\t\t\t\t\t\tconflict in the Middle East. There are signs that some firms experiencing cost pressures are
\n\t\t\t\t\t\tincreasing the prices of their goods and services and others are looking to do so. Short-term
\n\t\t\t\t\t\tmeasures of inflation expectations have eased but remain higher than earlier in the year.<\/p>\n
Financial conditions have tightened this year in response to three increases in the cash rate target.
\n\t\t\t\t\t\tMoney market interest rates and government bond yields have risen, and the exchange rate has
\n\t\t\t\t\t\tappreciated. There are signs that growth in consumer spending is slowing as expected and momentum in
\n\t\t\t\t\t\tthe housing market has shifted, with housing prices falling in some capital cities. The unemployment
\n\t\t\t\t\t\trate was higher than expected in April, but other measures of labour market conditions have been more
\n\t\t\t\t\t\tresilient. Growth in business investment is strong and credit is readily available to both households
\n\t\t\t\t\t\tand businesses.<\/p>\n
There continue to be heightened uncertainties about the outlook for domestic economic activity and
\n\t\t\t\t\t\tinflation. Resolution of the conflict in the Middle East is at an early stage, and there are
\n\t\t\t\t\t\tplausible scenarios where inflation is higher and activity lower than envisaged under the May
\n\t\t\t\t\t\tbaseline forecasts. Global oil supply issues will take some time to resolve, maintaining upward
\n\t\t\t\t\t\tpressure on global energy prices and inflation. At the same time, a period of prolonged uncertainty
\n\t\t\t\t\t\tmay also cause growth to be lower in Australia\u0092s major trading partners and in Australia.<\/p>\n
\t\t\t\t\tDecision<\/p>\n
As expected, the disruption to global oil supply is having an impact on inflation. Higher fuel prices have
\n\t\t\t\t\t\tadded directly to inflation and there are indications that this is passing through to the prices of other
\n\t\t\t\t\t\tgoods and services, so inflation is likely to remain high for some time. This inflation impulse is in
\n\t\t\t\t\t\taddition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the
\n\t\t\t\t\t\teconomy.<\/p>\n
The Board remains focused on ensuring that inflation does not become embedded once the impulse from
\n\t\t\t\t\t\thigher oil prices has passed through. To achieve this, growth in demand needs to slow to reduce
\n\t\t\t\t\t\tcapacity pressures and help bring inflation back to target. Following the three increases in the cash
\n\t\t\t\t\t\trate target since the beginning of the year, financial conditions are now tighter than they were, and
\n\t\t\t\t\t\tthere are signs that the economy is slowing as expected. But inflation is still too high and the
\n\t\t\t\t\t\tBoard judged that it was appropriate to leave the cash rate target unchanged while it assesses the
\n\t\t\t\t\t\tresponse to previous interest rate rises and the impact of the oil supply disruption.<\/p>\n
The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide
\n\t\t\t\t\t\tits decisions. In doing so, it will pay close attention to developments in the global economy and
\n\t\t\t\t\t\tfinancial markets, trends in domestic demand and the outlook for inflation and the labour market.
\n\t\t\t\t\t\tMonetary policy is well placed to respond to developments and the Board is focused on its mandate to
\n\t\t\t\t\t\tdeliver price stability and full employment. It will do what it considers necessary to achieve that
\n\t\t\t\t\t\toutcome, including increasing the cash rate target further if required.<\/p>\n
Today\u0092s policy decision was unanimous.<\/p>\n","protected":false},"excerpt":{"rendered":"At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35\u00a0per\u00a0cent. Inflation picked…\n","protected":false},"author":2,"featured_media":545567,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-739469","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/739469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=739469"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/739469\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/545567"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=739469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=739469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=739469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}