Heads up: RBA monetary policy decision due at the bottom of the hour
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In May, the RBA raised the cash rate by 25 bps to 4.35% then signaled that they would be pausing here . As a reminder, the central bank has been one of the early movers in having raised interest rates since February. So far this year, they have delivered 75 bps of rate hikes. The
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4 itemsHeads up: RBA monetary policy decision set for the bottom of the hour
The desk anticipates a hawkish shift from the RBA, likely raising the cash rate to 4.35% in response to persistent inflation pressures, as highlighted in the recent commentary from Justin Low. This move essentially reverses the brief easing cycle observed earlier in 2025, bringing rates back to levels not seen since 2011. Per the full note [source], the RBA's decision comes amid rising core inflation, currently at 3.5%, and geopolitical tensions that could further complicate their policy stance. With traders pricing in an 82% probability of a rate hike today and additional hikes by September, the market is positioned for a more aggressive RBA in the near term.
RBA raises cash rate to 4.35% in May monetary policy meeting, as expected
The Reserve Bank of Australia (RBA) has raised its cash rate to 4.35% in the May monetary policy meeting, a move anticipated by market participants. Per the full note [source], traders had priced in approximately 85% odds of a 25 basis point increase, with expectations for a total of around 61 basis points of hikes by year-end. This decision aligns with the broader trend of central banks tightening monetary policy in response to persistent inflationary pressures. As the RBA continues to navigate these economic challenges, market reactions will be closely monitored for further directional cues.