Trimmed mean inflation accelerates for the first time this year, keeping further rate rises on the table
April's monthly consumer price index (CPI) data has reinforced expectations that the Reserve Bank of Australia (RBA) will leave the cash rate unchanged at 4.35% when its board meets on 16 June, according to rate-tracking firm Canstar.
Headline inflation fell to an annual rate of 4.2% in April, down from 4.6% in March, largely driven by a halving of the fuel excise. Trimmed mean inflation — the RBA board's preferred measure, which strips out volatile price movements — rose to an annual rate of 3.4% on a seasonally adjusted basis, its first acceleration this year in the monthly dataset.
Economic teams of all four major banks forecast the RBA will leave the cash rate unchanged at 4.35% in June. Only Commonwealth Bank and ANZ, however, anticipate this will mark the conclusion of the current tightening cycle.
| Current big four bank cash rate forecasts | ||
| Bank | Forecast | Cash rate - end 2026 |
|---|---|---|
| CBA | No change | 4.35% |
| Westpac | 2 x 0.25 in Aug, Sept | 4.85% |
| NAB | 1 x 0.25 in Aug | 4.60% |
| ANZ | No change | 4.35% |
"A June rate hold was already looking likely after the RBA made clear in the minutes of the last Board meeting that they were looking for an opportunity to pause and take stock," said Sally Tindall, data insights director at Canstar.com.au.
Australian households have already been hammered with three cash rate hikes, the last two of which still haven't hit some borrowers' bank accounts. While motorists are finally getting some relief at the bowser, thanks to the temporary fuel excise cut, the RBA will be well aware that plenty of underlying price pressures are still bubbling away. The conflict in Iran is already pushing up costs for businesses, particularly in transport and construction, and we're starting to see those pressures trickle through to consumers in the form of fuel surcharges and higher prices at the checkout.
Tindall noted that while April's rise in unemployment to 4.5% was unlikely to unsettle the RBA — given it represented a single data point — it added to the accumulating case for the board to take a pause.
"That all said, trimmed mean inflation remains stickier than a toffee apple," she added. "In the last 12 months, the only moves it's made were in the wrong direction. If the Board does pause in June it won't signal the end of the hikes.
"If the current cash rate setting doesn't get inflation moving back in the right direction, the RBA will have no option but to ratchet up the pressure even further. If your finances aren't prepared for another couple of rate hikes, now is the time to start making those preparations."
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