RBA rate decision · 16 June 2026

[removed: Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of this increase reflected greater capacity pressures. In addition, the conflict in the Middle East has resulted in sharply higher fuel and related commodity prices, which are already adding to inflation. There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen.] At its meeting today, the Board decided to [removed: increase] [added: leave] the cash rate target [removed: by 25 basis points to] [added: unchanged at] 4.35 per cent.

[removed: The Bank has updated its forecasts to incorporate recent data and developments in the Middle East. The baseline forecast, which assumes that the conflict is resolved soon and fuel prices decline, sees underlying inflation peaking higher than was expected in February. It then declines as demand growth slows and capacity pressures ease in response to higher interest rates.] [added: Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures. The latest data show that headline and underlying inflation are still too high. Oil prices have eased in recent weeks, although energy and most related commodity prices remain higher than they were prior to the conflict in the Middle East. There are signs that some firms experiencing cost pressures are increasing the prices of their goods and services and others are looking to do so. Short-term measures of inflation expectations have eased but remain higher than earlier in the year.]

Financial conditions have tightened this [removed: year.] [added: year in response to three increases in the cash rate target.] Money market interest rates and government bond yields have risen, and the exchange rate has appreciated. [added: There are signs that growth in consumer spending is slowing as expected and momentum in the housing market has shifted, with housing prices falling in some capital cities. The unemployment rate was higher than expected in April, but other measures of labour market conditions have been more resilient.] [removed: But] [added: Growth in business investment is strong and] credit is readily available to both households and businesses.

[removed: A longer or more severe conflict could put further upward pressure on global energy prices; this 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.] There [removed: are materially] [added: continue to be] heightened uncertainties about the outlook for domestic economic activity and inflation. [removed: With] [added: Resolution of] the conflict in the Middle East [removed: continuing,] [added: is at an early stage, and] there are plausible scenarios where inflation is higher and activity lower than envisaged under the [added: May] baseline [removed: forecast.] [added: forecasts. Global oil supply issues will take some time to resolve, maintaining upward pressure on global energy prices and inflation.] [removed: But higher prices and] [added: At the same time, a period of] prolonged uncertainty may [added: also] cause growth to be lower in Australia’s major trading partners and [removed: also] in Australia.

Decision

As expected, [removed: developments in] the [removed: Middle East are] [added: disruption to global oil supply is] having an impact on inflation. Higher fuel prices [removed: are adding] [added: have added directly] to inflation and there are indications that this is [removed: likely] [added: passing through] to [removed: have second-round effects on] [added: the] prices [removed: for] [added: of other] goods and [removed: services more broadly.] [added: services, so inflation is likely to remain high for some time.] This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy.

[removed: In light of these considerations, the Board assessed that inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations. It was therefore judged appropriate to increase the cash rate target.] [added: The Board remains focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through. To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target. Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected. But inflation is still too high and the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.]

The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market. [removed: Having raised the cash rate three times, monetary] [added: Monetary] policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment. It will do what it considers necessary to achieve that [removed: outcome.] [added: outcome, including increasing the cash rate target further if required.]

[removed: Today’s policy decision was made by majority: eight members voted to increase the cash rate target by 25 basis points to 4.35 per cent; one member voted to leave the cash rate target unchanged at 4.10 per cent.] [added: Today’s policy decision was unanimous.]