Mountains to Climb: The Road Ahead for the RBA Cash Rate

Australia’s inflation rate started rising in mid-2025 following an acceleration in economic growth and a shallow cutting cycle for the Reserve Bank of Australia's cash rate target. Inflation had been accelerating despite growth in demand remaining modest by historical standards, likely because of ongoing weakness in the supply side of the economy where Australia’s poor productivity performance has cruelled the economy’s growth potential. The RBA has since responded by raising the cash rate three times in the first half of 2026.