The Reserve Bank was widely tipped to hold official interest rates even before news emerged early this morning that a peace deal between the US and Iran had been signed.
With the monetary board breathing a sigh of relief that oil prices have now tumbled and the Australian economy is free of any further energy shocks - especially given the Federal Government has ruled out extending the 50 per cent fuel excise discount beyond the end of June - a pause today now seems a near certainty.
Keep up to date with everything you need to know about today’s interest rate call in the feed below.
Key Events
‘I’m just not ruling that out’ Bullock warns households
Mortgageholders may have been looking to RBA governor Michele Bullock to confirm the worst is over after today’s pause.
They have been left disappointed.
Speaking at her regular post-rate call press conference, she said nothing could be ruled in or out given the threat of global uncertainty.
“The rates markets are doing their best to interpret what they think is coming for the economy and what we will do,” Ms Bullock said.
“I guess what I’m saying is I can’t rule out that if inflation doesn’t respond in the way we expect it to do, then we might have to doore.
“I’m just not ruling that out.”
Chalmers backs RBA hold but warns global risks remain
Treasurer Jim Chalmers has welcomed the Reserve Bank’s latest decision to hold interest rates steady, saying it provides a degree of stability while broader global risks continue to weigh on the outlook.
Speaking in Brisbane, he said the result was consistent with the government’s expectations following the recent federal budget, but warned international conditions remain difficult to predict.
“We’re pleased with developments in the Middle East but we’re realistic about how long it will take for the global economy to normalise and what that means for us,” he said.
“The end of this war can’t come soon enough. Australians have already paid a really hefty price for this conflict on the other side of the world.
“In Australia, we’ve seen inflation come off a bit, but we still know that those inflationary pressures are there, made worse by the war in the Middle East and its aftermath.”
Dr Chalmers described the RBA decision as a relief for millions of borrowers.
“It doesn’t make life any easier for people but it doesn’t make life harder either.”
So, what next?
Three of the big four banks aren’t expecting further hikes this year, and predict potential cuts on the cards in 2027.
Westpac is the outlier, forecasting up to two more 0.25 per cent rate increases this year.
Regardless, Compare the Market’s economic director David KochMr Koch urged Aussies to take control of their own fortunes by comparing and switching where cheaper rates are available.
“Everyone should be phoning their bank or broker to see if there’s a better offer out there,” Mr Koch said.
“We still hear about people on rates above 7 per cent when we know there are rates available in the high 5s and low 6s.
“It might not look like much, but it could reduce your monthly repayments by hundreds of dollars — potentially saving you thousands over time.”
Relief today, but it still hurts
The RBA may have spared more pain for millions of households with a mortgage, but many are still counting the cost of three consecutive hikes so far in 2026 that wiped out all relief delivered by the central bank at the end of last year.
Here’s what we’re now paying ... and how much extra it will cost if the RBA rules it’s not yet done in this cycle ...
All agree to pause
While some rate calls by the RBA this year have been spilt among the nine-member board, today decision to keep rates unchaged at 4.35 per cent was unanimous.
Fuel pain pours petrol on inflation
The central bank said the disruption to global oil supply after the US and Israel launched attacks on Iran in late Fenbruary was still having an impact on inflation.
Higher fuel prices, it said, have added directly to inflation “and there are indications that this is passing through to the prices of other goods and services”.
It warned inflation is likely to remain high for some time.
“This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy,” it said.
“The board remains focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through.
“To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target.”
What the RBA had to say ...
While a peace deal is all but done, the RBA says there continue to be heightened uncertainties about the outlook for domestic economic activity and inflation.
“Resolution of the conflict in the Middle East is at an early stage, and there are plausible scenarios where inflation is higher and activity lower than envisaged under the May baseline forecasts,” it said just minutes ago.
“Global oil supply issues will take some time to resolve, maintaining upward pressure on global energy prices and inflation.
“At the same time, a period of prolonged uncertainty may also cause growth to be lower in Australia’s major trading partners and in Australia.”
And it’s a hold!
The RBA has spared stretched Australian households a fourth-straight rate hike for 2026.
The central bank today instead opted to hit pause after increases in February, March and May start to show signs of cooling an overheat economy.
It would have also breathed a sign of relief after the US and Iran finally signed a peace deal that will reopen the Strait of Hormuz and resume the flow of oil to the global economy.
Count down is on
We’re just half an hour away from the RBA’s June rates call.
Stay with us as we bring you everything you need to know, including the central bank’s outlook for the road ahead ... and hints of whether we can expect more mortgage pain this year.
Should first-time buyers be worried about negative equity?
Few phrases create more anxiety for homeowners than negative equity.
It sounds alarming. It generates headlines. And for many Australians, particularly first-homebuyers who entered the market with smaller deposits, it can feel like a financial nightmare.
But before borrowers panic it’s important to understand what negative equity actually is, and what it isn’t, wrote Chris Foster-Ramsay, director of Foster Ramsay Finance, in this week’s Your Money in The West Australian.
Negative equity occurs when the amount owed on a home loan exceeds the property’s current market value. For example, if a homeowner owes $700,000 on their mortgage but the property is now worth $650,000, they are effectively $50,000 in negative equity.
On paper, that’s uncomfortable.
But in reality, negative equity only becomes a significant problem when a borrower is forced to sell, refinance or access equity while the property’s value remains below the loan balance.
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