Inflation details may give RBA pause for thought on interest rates
Recent inflation data shows underlying price pressures in Australia have stabilized but remain above the Reserve Bank's target band, giving policymakers reason to reconsider an expected rate hike. While headline inflation came in slightly below forecasts at 4.6%, the RBA's preferred measure held steady at 3.3%, suggesting domestic inflation may have peaked. With consumer and business confidence slumping and the federal budget approaching, the RBA faces tough choices on whether to hike again or hold rates steady. A divided board and external shocks, particularly from rising energy prices, complicate the outlook.
- ▪The RBA's preferred trimmed mean inflation measure was 3.3% in March, unchanged from the previous quarter.
- ▪Headline inflation was 4.6%, slightly below economist expectations, driven partly by a surge in electricity prices.
- ▪Four RBA board members opposed the March rate hike, citing concerns about timing and economic conditions.
- ▪Falling services and non-tradables inflation suggest domestic price pressures may have peaked despite recent rate hikes.
- ▪Economists are divided on whether the RBA will hike rates again in May, with some advocating for a pause to assess fiscal and global developments.
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analysisInflation details may give RBA pause for thought on interest ratesBy business editor Michael JandaTopic:Inflation53m ago53 minutes agoWed 29 Apr 2026 at 4:52amMichele Bullock says the four board members who voted against a rate hike in March were worried about timing. (AAP Image: Dan Himbrechts)abc.net.au/news/inflation-details-may-give-rba-pause-on-interest-rates/106620164Link copiedShareShare articleBefore today's inflation numbers, markets and economists treated next week's Reserve Bank meeting as a foregone conclusion — interest rates were heading up.According to data provider LSEG, markets were pricing in an 86 per cent chance that the RBA's cash rate would head up from 4.1 to 4.35 per cent, undoing all three of last year's cuts and taking it back to the equal highest level…
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