- Telephone
- Email
The Reserve Bank held the cash rate at 4.35% yesterday in a unanimous 9-0 decision, up from the 8-1 split we saw in May. The shift to consensus signals that the Board has aligned around a “wait and see” approach; three hikes in the books, now assessing whether they’ve done enough.
The more interesting development isn’t what the RBA did yesterday; it’s what happened the day before. The announcement of a US-Iran agreement to reopen the Strait of Hormuz has materially changed the inflation picture. Brent crude has fallen roughly 30% from its 2026 peak and dropped a further 10% on the deal announcement alone, sitting around $79 per barrel. If that trajectory holds, the energy shock that forced the RBA’s hand in the first place begins to unwind.
That said, we’re not calling the all-clear. The deal is a 60-day memorandum (far from a done deal) and the Board itself described it as “at an early stage.” Even if it holds, it takes weeks to months for lower oil prices to show up in Australian CPI data. The fuel excise also reinstates on 1 July, which will push headline inflation higher in the short term regardless of what oil does.
Our central forecast for August 11 is a hold (80%), with a 15% chance the Board hikes if the Hormuz deal stalls and inflation stays sticky, and a 5% chance of a cut if oil normalises faster than expected.
The single most important number between now and August 11 is the June-quarter Trimmed Mean inflation read, due 29 July. That result will tell us whether the inflation peak is genuinely behind us.
We are proud to have CBC Staff Selection as supporters of the Conus/CBC Staff Selection Trend Employment and Jobseeker data series