Overview
- Surveys and markets strongly expect the Reserve Bank to keep the cash rate at 4.35% at its mid‑June meeting, with a Reuters poll finding 42 of 45 economists forecast a hold and market pricing near certainty.
- The decision would be the first pause after three consecutive 25 basis‑point increases earlier in 2026 that lifted the rate to 4.35%.
- Energy‑price shocks tied to the US‑Israel/Iran conflict and reduced shipping through the Strait of Hormuz are driving supply‑side inflation that monetary policy cannot directly fix.
- The federal government has provided nearly $195 million in zero‑interest loans from a $1 billion program to support fuel, freight and logistics firms facing higher costs.
- Economists are split on what comes next: some, including Westpac’s Luci Ellis, model further hikes in August and September followed by cuts in 2027, while others predict a prolonged pause with rate cuts beginning in the second half of 2027.