RBA hikes rates for first time in more than two years — as it happened
The Reserve Bank's governor acknowledged borrowers would likely be disappointed but warned of a "harder" alternative.
www.sbs.com.auHere are the latest updates on the RBA and rate hikes:
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Australia’s central bank has continued its tightening cycle, with recent meetings delivering an additional 0.25 percentage point rise to the official cash rate, bringing the rate to 4.35% as of May 2026. This marks the third consecutive rate increase in 2026, after earlier hikes in February and May, as inflation remains above target and the bank argues further action may be needed to anchor price growth. The RBA has signaled that more increases could come if needed to bring inflation back to target ranges, indicating that the policy stance remains restrictive for now.[2][4][5]
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Market observers and major financial institutions have a range of expectations about the trajectory. Several predict further rate rises this year, while others foresee a pause later in 2026 depending on incoming inflation data and domestic demand conditions. The bank’s communications emphasize “second-round effects” and the need to keep monetary policy sufficiently tight to secure price stability.[4][2]
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For borrowers, the ongoing hikes imply higher mortgage repayments. Analyses note that even with the rate already at elevated levels, the central bank’s guidance suggests policy could stay restrictive for some time, potentially sustaining elevated borrowing costs into the latter part of 2026.[5][2]
Illustration: The trend is a staircase pattern—rates moved up in early 2026 and may continue rising if inflation does not settle back toward target, creating ongoing higher-cost financing for households and businesses until inflation clearly declines.[2][5]
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