Media Release
Statement by the Monetary Policy Board: Monetary Policy Decision
Number
2026-27
Date
29 September 2026
At its meeting today, the Board decided to increase the cash rate target by 25 basis points to
4.60 per cent.
Inflation remains elevated and some of the upside risks flagged in August are materialising. The conflict
in the Middle East has broadened and global energy prices are now much higher than had been assumed in
the August forecasts. AI-related demand is driving rapid growth in global prices for technology-related
goods. And there remains pressure on domestic capacity. Liaison indicates that firms are experiencing
cost pressures and are either increasing the prices of their goods and services or looking to do so.
Short-term measures of inflation expectations remain elevated. And recent inflation outcomes in Australia
were stronger than expected at the previous meeting.
Growth in output has slowed but, at the margin, was stronger than expected in the June quarter. There are
signs that growth in consumer spending is easing gradually as expected, although housing prices have
fallen in most capital cities and new housing loans have declined noticeably. Labour market conditions
have eased broadly as expected in recent months, and labour market leading indicators are broadly stable.
Meanwhile, growth in business investment and debt is strong.
There continue to be heightened uncertainties about the outlook for domestic economic activity and
inflation. The Middle East conflict remains unresolved, and there are scenarios where inflation is higher
and activity lower than forecast. Global oil supply disruptions are maintaining upward pressure on global
and domestic energy prices and inflation. A period of prolonged uncertainty may also cause growth to be
lower overseas and in Australia. To date, however, growth in Australia’s major trading partners has
been stronger than expected, as the boost from AI-related investment has outweighed the adverse effects
of the Middle East conflict. In Australia, weak productivity growth continues to constrain potential
growth and there are uncertainties about the economic effects of the downturn in the housing market.
Decision
Since the previous meeting, some of the upside risks to inflation are materialising. There have been
further disruptions to global oil supply and recent data suggest that growth and inflation in Australia
have been higher than expected. Higher fuel prices have partially been passed through to prices of other
goods and services. This inflation impulse is in addition to the effect of capacity pressures in the
economy.
The Board remains focused on ensuring that high inflation does not become embedded. To achieve this,
growth in aggregate demand needs to remain subdued for a period to reduce capacity pressures and bring
inflation back to target. The three increases in the cash rate target since the beginning of the year
have tightened financial conditions and the economy appears to be slowing. But inflation is still too
high and the Board judged that, in light of recent developments, a further tightening in financial
conditions is warranted to support a return of inflation to target in a reasonable period.
The Board will continue to do what it considers necessary to bring inflation sustainably back to target,
including increasing the cash rate target further if needed. Accordingly, the Board will be attentive to
the data and the evolving assessment of the outlook and risks to guide its decisions. Monetary policy is
well placed to respond to developments, and the Board is focused on its mandate to deliver price
stability and full employment.
Today’s policy decision was unanimous.
Enquiries
Communications Department
Reserve Bank of Australia
SYDNEY
Phone:
+61 2 9551 8111
Email:
rbainfo@rba.gov.au