RBA Raises Cash Rate to 4.35% Amid Middle-East Oil Shock

On 5 May 2026 the Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 4.35 per cent, the third increase this year. The Monetary Policy Board voted 8-1; one member preferred to keep the rate at 4.10 per cent.

CNBC

Headline CPI rose to 4.6 % in March, highest since 2025, after the U.S.–Israel war on Iran and the Strait of Hormuz closure lifted fuel prices. RBA now sees inflation peaking at 4.8 % in June and core 3.8 % in Q2. Growth was cut to 1.3 % and unemployment to 4.7 %.

UsNews and World Report

Governor Michele Bullock announced the hike, saying “get on top of inflation now”. Board voted for increase. Minister Jim Chalmers said it will “play a role” in curbing inflation. Opposition treasurer Tim Wilson blamed government spending for added pressure. NAB, Westpac and Australian Securities Exchange gave views on tightening.

Westpac sees upside inflation risks after RBA lifts cash rate to 4.35% in 8-1 vote

The board said fuel prices add to inflation and could cause effects, with risks tilted to the upside. Bullock added the board has “space to be alert to sides of the risks”, allowing a pause but keeping tightening options open.

Reuters

Tim Wilson warned “adds to inflation”. David Bassanese said two more hikes could trigger a recession.

The Sydney Morning Herald

Inflation forecasts diverge: some models peak near 5 % while the RBA targets 4.8 %. Growth estimates vary from 1.3 % to 1.9 % for 2026, and unemployment is projected between 4.7 % and above 5 % if oil prices stay high. The duration of the Strait of Hormuz closure remains uncertain.

Reuters

• “Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted,” — Michele Bullock, RBA Governor

The Guardian

• “Higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly,” — RBA Board, Statement on Monetary Policy

Reuters

• “The extent to which government make up the shortfalls for households by giving them more money makes it harder to dampen demand,” — Michele Bullock, press conference

The Guardian

• “We feel we’re now in a position where we’ve got space to be alert to both sides of the risks,” — Michele Bullock, post-decision briefing

The Sydney Morning Herald

The RBA meets again on 15-16 June; markets assign a roughly 20 % chance of another 25-bp increase. The federal budget, due 12 May, will outline fiscal measures that could affect demand. Analysts will watch oil-price trends, the Strait of Hormuz status and the April CPI release for signs of inflation persistence.

Reuters