RBA holds 4.35% — CPI data eases but trimmed mean rises; rate relief hopes; RBA monitoring energy price shock; Bullock confirms housing market cooling
Key Questions
What was the RBA's decision on the cash rate?
The RBA held the cash rate at 4.35% following its third hike. Governor Bullock indicated further tightening may be needed due to fuel-driven CPI pressures and Middle East tensions.
How did recent CPI data affect rate hike expectations?
April headline CPI eased to 4.2% thanks to fuel excise cuts, but the trimmed mean rose to 3.4%. Markets now price a 40% chance of an August hike, down from 51%, with June odds near zero.
What factors are driving inflation concerns according to the RBA?
Higher fuel costs from Middle East conflicts are projected to keep inflation above 3% until mid-2027. The May 2026 Statement highlights these persistent pressures alongside core inflation at its highest since late 2024.
How are Australian markets and households responding to the rate outlook?
The ASX 200 slumped on Brent oil above $100 but later rallied on rate relief hopes. Household spending fell 1.1% in April, with arrears doubling and recession risks rising amid geopolitical uncertainty.
What new analysis explains Westpac's updated rate hike forecast?
A video from Mark Bouris and former RBA chief economist Luci Ellis links global oil disruptions to local inflation. Westpac has shifted its expected next hike to August, reflecting these external shocks.
RBA holds 4.35% post-third hike; Bullock flags further amid fuel-driven CPI/Middle East; ASX 200 slumps on Brent >$100; Westpac shifts next hike to Aug, arrears double; NAB recession fears. RBA May 2026 Statement projects inflation >3% until mid-2027 from fuel costs. April CPI headline eased to 4.2% (fuel excise cut), trimmed mean 3.4% – June hike odds near zero. Markets now price 40% chance of August hike, down from 51%. Core inflation at highest since late 2024. Household spending fell 1.1% in April. ASX rallied on rate relief hopes. US-Iran strikes add geopolitical risk, hitting ASX and oil prices. New video analysis from Mark Bouris & former RBA chief economist Luci Ellis explains why Westpac now expects more rate hikes, tying global oil disruptions to local inflation. CommSec AM video (2 June) notes ASX to fall, eyes on Northern Star. Latest GDP data (March quarter) shows growth slowed to 0.3%, per capita GDP falling, living standards slipping. AI/data centre investment booming while households tighten belts. Recession risk real as Middle East conflict worsens and RBA may hike. Megaport secures four US AI contracts, raising $594M – further evidence of two-speed economy. Reuters article confirms RBA monitoring impact of higher rates and energy price shock. RBA governor Bullock confirms rate hikes cooling housing market, full effects 1-2 years away, negative equity not a concern yet. Wage-price spiral debate with Senator McKim highlights real wage stagnation. KPMG whistleblower contract to be dropped.