April CPI signals RBA pause, for now

Mike Taylor

Managing Editor and Publisher

28 May 2026

The April Consumer Price Index (CPI) data released by the Australian Bureau of Statistics yesterday has seen market economists predicting the Reserve Bank board will leave interest rates on hold next month.

The April data showed that annual inflation had moved lower with headline CPI at 4.2%, an improvement on the March outcome of 4.6% but everyone noted that the April number is a reflection of the Government’s actions in temporarily cutting the fuel excise tax.

MLC senior economists, Bob Cunneen reflected broad sentiment in suggesting that the CPI numbers suggested that the RBA board would likely leave rates on hold next month.

“While another 0.25% interest rate rise by the RBA is the most likely prospect sometime this year given Australia’s high inflation, June’s RBA meeting is likely to see no change,” he said.

Bank of New York APAC macro strategist, Whee Khoon Chong said the April CPI had delivered a mixed signal but suggested the data would likely “reinforce a status quo outcome at the June RBA meeting, while leaving the door opening to further tightening in the second half”.

“Markets currently price a terminal rate of around 4.60% by year-end, implying one additional 25bp hike, though we continue to see upside risks to the RBA path. The upward trend in trimmed mean inflation should keep the RBA on a hawkish stance,” he said.

Pitcher Partners chief investment officer, Cameron Curko said the CPI result “arguably buys the RBA time to continue holding at its upcoming June session and re-evaluate for its August meeting”.

“The negligible improvement in core inflation measures makes subsequent rate hikes a real possibility in our view. This is because persistent core inflation above 3% makes it unlikely we will see headline inflation subside into the target 2-3% range.

“The fact we have seen limited labour market deterioration to date will only keep the RBA further focused on its price stability mandate as economic growth conditions, thus far, are insufficient to move it towards an easing bias.”