Blog post by Empower Wealth

(LIVE) RBA May 2026 | Why This May Not Be the Last Rate Hike

In its May meeting, the Reserve Bank lifted the cash rate by 0.25% to 4.35%, marking the third consecutive rate hike this year.

Unlike March’s narrow 5–4 split, this latest decision was passed 8–1 in favour of the hike — a clear signal that the Board is increasingly concerned about inflation and may not be finished yet.

Adding to the challenge, ongoing tensions in the Middle East have pushed oil and fuel prices higher, creating another layer of inflationary pressure at a time when Australia is already dealing with persistent domestic price growth.

The RBA has also warned that a longer or more severe conflict could lift global energy prices further and feed into inflation expectations.

In this month’s LIVE RBA & Economic Update, Ben Kingsley and economist Evan Lucas unpack the decision, the data behind it, and what this shift means for household budgets, borrowing capacity, and the property market.

What Happened Today?

The RBA increased the cash rate by 25 basis points to 4.35%.

While inflation had previously been easing, recent data shows renewed pressure. Headline inflation reached 4.6% in the year to March, with the RBA now expecting higher near-term inflation than previously forecast.

Fuel and energy prices are a key part of the story, but they are not the whole story.

As Ben and Evan discussed in the LIVE update, the concern is how these cost pressures flow through the broader economy — from transport and construction materials to food, packaging, household goods and business costs.

That is why the RBA is watching inflation expectations so closely. If households and businesses start to believe higher prices are here to stay, inflation can become much harder to bring back under control.

A Decisive Vote… And What It Signals

The 8–1 vote is a major shift from March’s much closer decision. It suggests the Board has become more unified in its view that inflation risks remain too high. The key takeaway: the RBA is not yet confident inflation is under control — and today’s decision may not be the last move in this cycle.

What This Means for You

Interest rate volatility is likely to remain a feature of 2026, particularly while inflation, oil prices, household spending and employment data continue to shift.

For borrowers and investors, this is a timely reminder to stay proactive. Reviewing your loan structure, ensuring your rate remains competitive, and maintaining adequate buffers can make a meaningful difference as conditions evolve.

If you’d like support in reviewing your borrowing strategy or planning your next steps, our team at Empower Wealth is always here to help.

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Tags: Australian economy, Australian property market, Cash Rate, Current Interest Rates, Gross Domestic Product (GDP), Home Loan, Inflation, Interest Rate, Interest Rate Announcement, Monetary Policy, mortgage broking, Property Market, property prices, RBA, rba cash rate, RBA Rate, Reserve Bank of Australia (RBA), Unemployment