Reserve Bank of Australia Leaves Cash Rate Unchanged at First 2026 Meeting

The Reserve Bank of Australia left its cash rate target unchanged at its most recent board meeting, the first time in 2026 that the board has chosen not to adjust the rate. The post-meeting statement said the board is focused on its mandate to deliver price stability and full employment.

It added that the board will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.

Governor Michele Bullock told reporters that today's decision does not rule out further tightening in monetary policy if that is what is required to bring inflation down. She said the board will be focused on the data and what that suggests about the outlook and risks. Bullock stated that inflation remains too high.

She said leaving rates on hold will allow the board to assess how previous increases are flowing through the economy. The RBA's next board meeting is scheduled for August 2026. Between now and then the bank will receive another set of monthly inflation numbers, the June quarter consumer price data, and two more sets of unemployment figures.

Traders have placed the probability of an August rate rise in the high-20s percent range. The market has priced in roughly even odds on whether rates will rise at all from current levels. Commonwealth Bank analysts have expected the RBA to be done raising rates after its May hike and to begin cutting next year.

ANZ and NAB now forecast two and three cuts respectively in 2027. Westpac still projects two additional hikes before cuts begin. Westpac economist Luci Ellis wrote that a further unexpected weakening in the domestic economy and a better inflation outlook would be needed to prevent further cash rate hikes.