MNI RBA Preview-June 2026: Pause, Inflation Worries Persist

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EXECUTIVE SUMMARY: 

• The RBA is likely to keep rates at 4.35% when its decision is announced on Tuesday 16 June, in line with an almost unanimous Bloomberg forecast. After its third consecutive hike in May, Governor Bullock said that the Board now feels it has "space" to monitor geopolitical developments and data.
• While we expect the vote to be close to 9-0 in favour of pausing, the tightening bias is likely to be maintained given ongoing inflationary concerns and the current forecast that trimmed mean doesn’t return to the target band until H2 2027 under the assumption of another 1-2 hikes.
• There remains a significant chance of further rate hikes this year as underlying inflation remains above the top of the target band and consumer inflation expectations are elevated.
• While OIS continues to price further tightening across all meetings, there is only half of one 25bp hike priced for this year.