05/05/2026
Another interest rate rise today by the RBA sees the cash rate go to 4.35%. This is the third rise this year and sees the cash rate back to its pandemic-era peak. Some are predicting a few more rate rises still to come.
Geoff Chambers wrote in The Australian yesterday:
“Australia's inflation inferno was ignited before
Donald Trump's war in Iran and will burn the wallets of long-suffering voters until at least the end of 2027.
A week out from Jim Chalmers handing down his fifth budget, Reserve Bank governor Michele Bullock stated the bleeding obvious in warning governments (again) to stop spending and driving up demand.
After the RBA monetary policy board hiked rates for the third time this year and flagged expectations of a fourth hit for mortgage holders within months, Bullock delivered a grim economic outlook for Australia and devastating budget-eve news for Chalmers.
As the central bank pulls its only lever to lower inflation and the government prepares to impose new taxes and maintain mammoth spending levels in next week's budget, households and business owners are bracing for the cash rate to reach its highest levels since 2011.
Bullock, who must be frustrated that governments are ignoring the central bank, said "the extent to which the government makes up the shortfalls for households by giving them more money, it makes it harder to dampen demand".
Upgraded RBA forecasts released on Tuesday showed the cash rate will hit at least 4.7 per cent this year and remain at that level through 2027 and 2028. The unemployment rate will rise to 4.7 per cent and stay there through mid-2028.
On cost pressures, trimmed mean inflation is forecast to hit 3.8 per cent in June and won't - return to the RBA's target band of between 2 and 3 per cent until December next year. Headline inflation will rise to 4.8 per cent in June and stay above 4 per cent in 2026, while GDP growth has been downgraded to paltry levels.”
