Reserve Bank of Australia — Policy Preview

Decision due: Tuesday 29 September, 14:30 AEST · Current cash rate target: 4.35%

1. Executive summary

The Reserve Bank of Australia is expected to raise the cash rate target 25 basis points to 4.60% at the 29 September decision. The single most important driver is trimmed-mean CPI stuck at 3.6% year-on-year, still well above the 2-3% target band, at a time when upside risks from higher EIA WTI spot prices appear to be materialising. Surveyed economist consensus aligns with a move. The key risk is that the Monetary Policy Board judges recent labour-market softening and weaker confidence surveys sufficient to keep policy unchanged and assess the lagged effects of the three hikes delivered earlier in 2026.

2. The call

A 25 basis point increase to 4.60% is the base case. This would follow the unanimous hold at the 11 August decision, when the Board judged policy already somewhat restrictive but retained the option to tighten further if upside inflation risks materialised. Surveyed economist consensus (Reuters 33 of 34; all four majors) points to a move to 4.60%; 2-year yields are 37bp higher since the August decision. Moderate conviction belongs on November / statement language, not on the move itself.

3. The committee

Lean labels summarise RoboMacro's read of each member's public communications over the past six months, from Hawkish to Dovish. A lean is assigned where recent remarks carry a monetary-policy stance, or where a recorded vote is a dissent, hike or cut: 5 of 9 members currently qualify (Bullock, Hauser, Fry-McKibbin, Preston, Ross).

Michele Bullock and Andrew Hauser remain the pivotal voices, both having struck hawkish notes in speeches published after the August hold. Bullock has repeatedly highlighted "some of these upside risks to inflation appear to be materialising". Hauser has been more explicit on the possibility of further tightening. Iain Ross provided the clearest counterpoint in remarks published 22 September while reciting the August SMP forecasts on the inflation path and spare capacity: "The overall thesis is that there is no evidence of the emergence of a wage-price spiral in the present circumstances and recent data suggest such an outcome is unlikely". Melinda Cilento attends her first meeting. The vote record shows the Board was unanimous on the June and August holds after earlier 5-4 and 8-1 splits on the March and May hikes; the unattributed tallies remain the only formal expression of internal divergence.

4. Data since the last decision

No new release since the last decision for: CPI inflation (YoY, quarterly), Trimmed-mean CPI (YoY, quarterly) — the committee sees the same print(s) it saw last time. Market priors: AUD/USD from 11 Aug; WTI crude from 31 Jul; 2Y government yield from 11 Aug; 10Y government yield from 11 Aug — each series' last print on or before the last decision. The crude prior uses the previous month-end when the decision falls before the 15th. Priors marked "revised" are the source's current vintage for that period, which differs from the figure as first published. Market rows span 5 days (22 Sep to 27 Sep) — not a single as-of snapshot. WTI crude (EIA WTI spot, USD/bbl) inter-meeting high 107.02 on 15 Sep (+24.2% from the decision close). market rows span 5 days (22 Sep to 27 Sep) — not a single as-of snapshot. The hike case is the July monthly trimmed mean of +0.5% (largest in a year) with the annual rate stuck at 3.6%. Headline CPI has continued to decline but remains above target; the gap between headline and trimmed mean continues to reflect direct fuel-price swings that are stripped from the core measure by construction. Activity indicators surprised on the firm side, with Q2 GDP growth beating expectations on both quarterly and annual bases and household spending surprising sharply higher, yet business and consumer confidence have deteriorated, manufacturing PMI fell below 50 while services PMI eased to 51.4. The labour market is loosening at the margin—unemployment rose to 4.6% and wage growth was unchanged at 3.2%—but the August employment gain was almost double consensus; the mix is not hawkish: full-time fell, part-time rose, participation rose to 67.1%, unemployed rose. Bullock’s CEDA band is "unemployment between 4.5 and 5" — 4.6% sits inside it. EIA WTI spot prices have risen sharply since the August decision, reopening the supply-shock channel the Board highlighted in June and August.

The outlook the Board will set policy against therefore shows inflation still materially above the 2-3% target band with momentum stalled on the trimmed-mean measure that receives primacy. Upside risks from energy pass-through and lingering capacity pressures appear more prominent than they did in August. Demand growth is below trend on a year-on-year basis and the labour market is no longer tightening, yet the recent strength in employment and spending suggests excess demand has not yet been fully eliminated. Inflation level and near-term trajectory are doing the majority of the work in the case for a hike; the labour-market loosening provides the main offset but has not yet produced a decisive decline in wage or price pressures.

5. What the speeches say

6. Scenarios

7. Into the meeting

This is not an SMP meeting, so there will be no new forecasts. The statement is likely to reiterate that policy is somewhat restrictive while flagging that inflation is still too high and that upside risks, particularly from energy, have increased since August. The press conference will be watched for any shift in the governor’s assessment of whether the three earlier hikes have been sufficient and for her reaction to the sharp rise in EIA WTI spot prices. Immediate market focus will be on whether the Board restores an explicit tightening bias or retains the more neutral language of the August minutes. The Aug Consumer Price Index due on 30 September will be the first test of whether the July headline softening extended (core did not soften); the Sep Consumer Price Index and Q3 Quarterly Inflation Rate due on 28 October will then dominate the run-up to the 3 November meeting. The minutes due on 13 October will provide the first detailed read of any debate around the September move.

Full analysis on the RoboMacro site → /central-banks/RBA