RBA Lifts to 4.35% on Near-Unanimous Vote as Inflation Forecasts Rise

• The RBA moved again, lifting the cash rate to 4.35%, with the decision largely supported across the Board (8-1 split), extending the current tightening phase.
• In its communication, the Bank leaned into the uncertain backdrop, flagging that both the growth outlook and inflation path are becoming harder to pin down in the current environment.
• A key theme was the combination of domestic capacity constraints and external pressures from the Middle East, which are now feeding into higher expected peaks for inflation, with projections sitting around 4.8% for headline and 3.8% for core.
• Markets took the move in stride, with yields edging lower post-decision – 3-year futures around 4.64% and 10-years near 4.98%. Pricing continues to lean toward further tightening, with another hike expected and around a 70% chance of a move by August.
• Separately, household spending data showed a strong monthly lift in March (+1.6%), although the broader quarterly trend was softer, with 1.0% growth and volumes up 0.7%, pointing to more modest price pressures over the period.