The Reserve Financial institution of Australia (RBA) raised its money fee by 25 foundation factors to 4.10% at its March assembly, delivering a second consecutive fee hike as stubbornly excessive inflation and rising power prices from the Center East battle tilted dangers additional to the upside.
The choice handed by the narrowest doable margin — 5 votes to 4 — which finally weighed on the Australian greenback regardless of the tightening transfer.
Key Takeaways
- RBA raised rates of interest by 25 bps to 4.10%, marking the primary back-to-back hike since mid-2023
- The choice handed in a 5-4 vote, the closest vote because the RBA started disclosing tallies
- Gov. Bullock clarified the break up was about timing, not path — all members agreed one other hike was wanted
- The board cited a materials danger that inflation will stay above goal for longer than anticipated, with the battle within the Center East including additional upside danger through sharply increased gasoline costs
- Trimmed imply CPI stood at 3.4% y/y in January, with month-to-month CPI at 3.8% — each above the RBA’s 2%–3% goal band
- This autumn 2025 GDP got here in at 2.6% yearly, above the RBA’s estimated 2% velocity restrict, whereas the unemployment fee held close to 4.1%
- Markets pared again bets on a Might follow-up hike to roughly 25–30% following the shut vote, down from round 70% previous to the choice
Hyperlink to Reserve Financial institution of Australia Financial Coverage Assertion (March 2026)
The March choice mirrored persistent home inflation and rising energy-driven worth pressures tied to the US-Iran battle. Inflation picked up within the second half of 2025, and up to date information confirmed more-than-expected extra demand, with This autumn GDP at 2.6%, labor underutilization close to historic lows, and inflation expectations climbing to five.2% in March.
The Center East battle added one other layer, with oil leaping from round $56 to over $100 in underneath three weeks, elevating the chance of broader inflation pressures. Nonetheless, Governor Bullock made it clear that gasoline prices weren’t the primary concern, as inflation was already working too scorching, and warned that failing to behave may entrench worth pressures, even acknowledging {that a} recession could also be wanted, although not desired.
Hyperlink to RBA Gov. Bullock’s Press Convention (March 2026)
In her press convention, RBA Gov. Bullock clarified that the break up vote mirrored disagreement over timing relatively than path.
Members who voted to carry nonetheless acknowledged the necessity for a future fee enhance — Bullock described their place as voting to carry “in a hawkish sense.” All 9 members agreed one other hike was warranted; the talk was merely whether or not March or Might was the appropriate second.
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Market Reactions
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart Sooner with TradingView
The Australian greenback had been trending increased throughout the board into the Asian session forward of the choice, probably reflecting positioning for the broadly anticipated hike.
That transfer reversed sharply on the announcement, with AUD promoting off throughout all pairs. AUD/USD led the drop, falling round 0.25% because the tight 5 to 4 vote triggered aggressive repricing of the Might outlook, with follow-up hike odds sliding from roughly 70% to round 25 to 30%.
AUD started clawing again losses about quarter-hour after the discharge and into early London commerce round Bullock’s presser, with most pairs recovering a part of the preliminary transfer.
AUD/NZD stood out as the highest performer, pushing up round +0.35%, whereas AUD/USD lagged, probably held again by broader USD power tied to secure haven demand amid ongoing Center East tensions.
