The RBA Monetary Policy Board left the cash rate at 4.35% today as widely anticipated. The decision was unanimous.
There was something for both the hawks and doves in the Board’s statement.
On the hawkish side, the Board noted that inflation is still too high, likely to remain high for some time, and is “in addition to the high inflation recorded around the start of 2026”. To get inflation down the Board said that demand growth “needs to slow”. Notably, the Board said that it will increase the cash rate target further if required.
In contrast, the Board noted that there are signs that the economy - including consumer spending growth - is slowing as expected and “momentum in the housing market has shifted” amid tighter financial conditions. Moreover, the jump higher in the unemployment rate in April surprised the Bank, though today’s Statement noted that “other measures of labour market conditions have been more resilient”.
