Monetary Policy Decision

Media Conference – 29 SEPTEMBER 2026

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Decision
The cash rate target increased by 25 basis points to 4.6 per cent. The policy decision was unanimous.

Inflation
The headline inflation is too high, and underlying inflation also remains elevated. The Middle East conflict has broadened, pushing global energy prices well above the levels assumed in the August forecasts. AI-driven demand is fueling a sharp rise in global prices for technology-related goods. Firms experiencing higher input costs are increasing the prices of their goods and services, with more expected to follow. Short-term measures of inflation expectations remain elevated, yet they are anticipated to anchor above target.

Economic and Labour Market Conditions
Economic conditions have tightened and growth in output has slowed this year. Growth in consumer spending is easing gradually, as expected. Housing market momentum has softened, with prices declining across most capital cities and a noticeable drop in new housing loans. Labour market conditions remain resilient overall. Meanwhile, growth in business investment and credit is robust. Looking forward, resolution of conflict in the Middle East remains inconclusive, with heightened uncertainty around inflation pressure and weaker economic activity. Growth among Australia’s major trading partners has outpaced expectations, with AI-related investment offsetting the adverse effects of the Middle East conflict, though prolonged uncertainty may constrain future growth.

Monetary Policy Stance
Today’s decision is difficult for households with mortgages and businesses with loans, but high inflation hurts all Australians. The Board remains focused on preventing high inflation from becoming embedded. Achieving this requires the cash rate target to remain restrictive. The Board will take any action it considers necessary to achieve this outcome, including further increases in the cash rate target if required.