RBA Lifts Rates for Second Month Amid Inflation Pressures
The Reserve Bank of Australia raised its cash rate by 25bps to 4.1% at its March 2026 meeting, following a hike in February, in line with market expectations. In a split decision, the move was driven by a broad set of data pointing to renewed inflationary pressures in H2 of 2025. While some of the pickup is seen as temporary, the board noted modest labour market tightening and stronger capacity constraints than previously assessed. Elevated uncertainty around the Middle East conflict could add to global and domestic inflation risks. Against this backdrop, the RBA expects inflation to remain above target for some time, with risks skewed to the upside, including through expectations, warranting the latest increase. Policymakers stressed a data-dependent approach, monitoring global and financial conditions, domestic demand, and labour trends. They emphasized that policy remains flexible and positioned to respond as needed, with a continued focus on price stability and full employment.
