The RBA meets on 5 May 2026 to decide whether to raise the cash rate for a third consecutive time. The current rate is 4.10% — set on 17 March 2026. Three of Australia’s four major banks expect another hike to 4.35%. Markets are pricing a 60 to 62 per cent probability of an increase. The decision hinges almost entirely on one number: the March quarter CPI data, due on 29 April 2026.
What the Big Banks Are Predicting
The consensus among major bank economists has shifted decisively toward another hike:
| Bank | May 2026 forecast | Peak cash rate |
|---|---|---|
| CBA | Hike to 4.35% | 4.35% |
| NAB | Hike to 4.35% | 4.35% |
| Westpac | Hike to 4.35% | 4.35% |
| ANZ | Hold at 4.10% | 4.10% |
AMP Chief Economist Shane Oliver puts it plainly: “Our base case is that they will hike, but it’s not a certainty. There’s roughly a 60% chance of a hike and a 40% chance they will hold.” UBS similarly expects a 25bp increase in May, describing the current RBA as a “hawkish outlier” compared to most global central banks.
The lone dissenter is ANZ, which argues the split 5–4 vote in March signals enough caution within the Board that a pause is equally plausible.
The Number Everyone Is Watching — 29 April CPI
The March quarter CPI data releases on 29 April 2026 — just six days before the May decision. This is the single most important data release between now and 5 May.
The Board will be asking one question: is trimmed mean inflation still accelerating, or has it peaked?
At the March meeting, trimmed mean inflation was running at 3.4% annually. If the March quarter data shows another acceleration, a third consecutive hike becomes very likely. If it shows meaningful deceleration — even modest — the Board may pause to assess whether the February and March hikes are already flowing through to demand.
For full context on Australia’s inflation picture, see our Australia CPI and inflation guide.
What a Third Hike Means for Your Mortgage
If the RBA raises to 4.35%, it would be just 25 basis points below the November 2023 peak — effectively undoing all three rate cuts delivered in 2025.
On a standard 30-year variable rate home loan, the combined February and March hikes have already added approximately $165–$180 per month to repayments on a $600,000 loan. A third hike adds roughly another $80–$90 per month on top of that.
AMP’s Shane Oliver also flagged the broader impact: every 0.25% increase in the cash rate reduces borrowing capacity by approximately $25,000. For first home buyers still trying to enter the market, that is meaningful.
All four major banks passed on the February and March hikes in full. There is no reason to expect different behaviour if May delivers another increase. For the full picture of how rising rates are affecting Australian homeowners, see our Australia mortgage stress 2026 guide.
The Case for a Hold
Not all economists are convinced. The March vote was 5–4 — a narrow majority. Four Board members judged that holding was appropriate. Their concern: two back-to-back hikes may already be doing enough work, and it takes time for monetary policy to flow fully through the economy.
ANZ’s position is that the RBA will take May as a pause — assessing the cumulative impact of the February and March tightening before deciding whether more is needed. The Middle East conflict adds a further complication: rising energy prices from a supply shock are not something rate hikes can easily fix, and over-tightening risks slowing growth unnecessarily.
What Happens After May?
Whether the RBA hikes or holds in May, the broader message from the Board is consistent: cuts are not coming any time soon. The RBA’s own projections do not see trimmed mean inflation returning to the middle of the 2–3% target band until mid-2028.
The remaining 2026 meetings are June, September, November, and December. Each will be shaped by the data that accumulates between now and then.
For the full timeline of every 2026 RBA decision, see our RBA interest rates 2026 full timeline.
This article is for general informational purposes only and does not constitute financial advice. Always consult a registered financial adviser for advice specific to your situation. This article will be updated after the 5 May 2026 decision.
