---
source: Reserve Bank of Australia
url: https://www.rba.gov.au/media-releases/2026/mr-26-12.html
document_type: html
date_retrieved: 2026-05-05
period: May 2026
parent_publication: Monetary Policy Decision
indicators_covered: [Cash Rate]
---

# Statement by the Monetary Policy Board: Monetary Policy Decision

**Date:** 5 May 2026  
**Release Number:** 2026-12  
**Decision:** Cash rate target increased by 25 basis points to **4.35 per cent**

## Decision Details

- **Previous cash rate:** 4.10%
- **New cash rate:** 4.35%
- **Voting:** 8 members voted for the increase; 1 member voted to leave rates unchanged

## Rationale

> "In light of these considerations, the Board assessed that inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations. It was therefore judged appropriate to increase the cash rate target."

**Key factors cited:**

1. **Inflation acceleration:** Picked up materially in second half of 2025; confirmed to reflect greater capacity pressures
2. **External shock:** Middle East conflict causing sharply higher fuel and commodity prices
3. **Second-round effects:** Early signs firms are passing cost pressures through to goods/services prices
4. **Inflation expectations:** Short-term measures have risen

## Economic Outlook

- **Baseline forecast:** Underlying inflation will peak higher than February expectations, then decline as demand slows and capacity pressures ease from higher rates (assuming conflict resolves and fuel prices decline)
- **Financial conditions:** Already tightened this year—money market rates and bond yields up, exchange rate appreciated, but credit remains readily available
- **Risks:** Materially heightened; scenarios include higher inflation and lower activity if conflict prolongs or intensifies

## Forward Guidance

> "The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market. Having raised the cash rate three times, monetary policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment. It will do what it considers necessary to achieve that outcome."

## Verification

- **Actual value `4.35`** confirmed in text: "increase the cash rate target by 25 basis points to 4.35 per cent"
- **Previous `4.1`** confirmed in voting rationale: "one member voted to leave the cash rate target unchanged at 4.10 per cent"
- **Date** matches payload: 5 May 2026