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