Rate Announcement and History
Tuesday 5th May 2026
At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.35 per cent.
- 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.
- 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.
- 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. Having raised the cash rate three times, 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 outcome.
To view the full statement of Michele Bullock, Governor of the Reserve Bank, please click here.
Why do RBA interest rate decisions matter?
RBA interest rate decisions are the key tool for the RBA to influence the Australian economy. They matter for a number of reasons, and affect people of all ages and circumstances:
- Deposit holders (including individuals and businesses) will experience this directly through the interest rates offered by banks. To some extent, this also applies to the cash and defensive assets within super and other accounts.
- Borrowers (again, including individuals and businesses) feel the effects through the interest and principal repayments on variable rate loans (and indeed on new fixed rate loans).
- Lower interest rates tend to stimulate the economy, by improving cashflow for individuals and businesses with debt, as well as encouraging investment spending and employment. Conversely, higher rates restrict household & corporate budgets and spending, putting the brakes on the economy.
- Expectations of economic performance, along with other mechanisms for pricing financial markets, tend to provide a positive environment for growth investments like shares and property, which feature heavily in more investors portfolios including super.