Interest rate rise, on 17.03.26 the RBA increase the cash rate by 25 basis points to 4.10%

Interest rate rise, on 17.03.26 the RBA increase the cash rate by 25 basis points to 4.10%

While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025. Information since the February meeting suggests that some of the increase in inflation reflects greater capacity pressures.

In addition, the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation.

Short-term measures of inflation expectations have already risen. As a result, the Board judged that there is a material risk that inflation will remain above target for longer than previously anticipated.

Higher capacity pressures reflect, in part, the greater momentum in demand in the latter part of 2025. Growth in private demand strengthened substantially more than was expected in mid-2025, although the composition of that growth surprised in the December quarter.

Business investment was above expectations and consumption was below expectations. Meanwhile, growth in unit labour costs declined.

More recently, the unemployment rate has been a little lower than expected and measures of labour underutilisation remain at low rates.

Activity and prices in the housing market grew strongly over the past year, although housing price growth moderated somewhat at the start of 2026.

Source: RBA https://www.rba.gov.au/