RBA keeps options open

As was widely expected the Reserve Bank of Australia raised the official cash rate to 4.35 per cent at its May policy meeting. While the tone of the central bank’s post-meeting statement was on the hawkish side, the press conference started with more of the ‘pause-related language’ ANZ Research expected.

ANZ Research’s view remains that the RBA will pause in June, with the 5:4 vote in March suggesting a strong preference among some board members for moves in Statement on Monetary Policy (SMP) meetings (that is, February, May, August and November).

By August – in the absence of a rapid resolution to the conflict in the Middle East and a resumption of oil flows – ANZ Research expects activity data in Australia to be looking soft to enough keep the RBA on hold.

The RBA staff also appear to be anticipating a 1.0 per cent, quarter-on-quarter trimmed mean inflation outcome for the June quarter, which would make it difficult for the central bank to hold rates steady in August in the absence of a soft activity picture.

But ANZ Research’s forecast is for a slightly lower trimmed-mean outcome. ANZ Research also think the risk to the RBA’s second-quarter unemployment rate forecast is skewed toward a higher unemployment rate. As a result, ANZ Research think the data flow over the next few months will ultimately see the RBA keep the cash rate at its current 4.35%.

Adam Boyton is ANZ’s Head of Australian Economics

This is an edited version of the ANZ Research report “RBA Monetary Policy Board’s May meeting and SMP”, published May 5, 2026