{"id":126633,"date":"2026-05-04T12:34:00","date_gmt":"2026-05-04T08:34:00","guid":{"rendered":"https:\/\/noortrends.ae\/en\/?p=126633"},"modified":"2026-05-04T12:34:04","modified_gmt":"2026-05-04T08:34:04","slug":"rba-set-to-pull-the-trigger-again-third-rate-hike-of-2026-expected-as-iran-war-inflation-bites","status":"publish","type":"post","link":"https:\/\/noortrends.ae\/en\/rba-set-to-pull-the-trigger-again-third-rate-hike-of-2026-expected-as-iran-war-inflation-bites\/05\/04\/market-updates\/","title":{"rendered":"RBA Set to Pull the Trigger Again: Third Rate Hike of 2026 Expected as Iran War Inflation Bites"},"content":{"rendered":"\n<h1 class=\"wp-block-heading\"><\/h1>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Takeaways<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Hike widely expected:<\/strong> The RBA is anticipated to raise rates by 25 basis points to 4.35% on May 5 \u2014 its third hike of the year.<\/li>\n\n\n\n<li><strong>Easing cycle reversed:<\/strong> The move will fully unwind the brief easing cycle of 2025 and return rates to late-2024 levels.<\/li>\n\n\n\n<li><strong>Inflation alarm bells:<\/strong> Core inflation remains well above the RBA&#8217;s 2-3% target, with energy shocks from the Middle East war set to exacerbate price pressures.<\/li>\n\n\n\n<li><strong>Hawkish but neutral ahead?:<\/strong> Analysts expect the RBA to shift to a more neutral stance after May&#8217;s hike, giving it room to assess the full inflationary impact.<\/li>\n\n\n\n<li><strong>Bullock&#8217;s tone:<\/strong> Governor Michele Bullock has maintained largely hawkish rhetoric without explicitly signaling more hikes.<\/li>\n\n\n\n<li><strong>Labor market still tight:<\/strong> Continued strength in employment provides headroom for further tightening.<\/li>\n\n\n\n<li><strong>March CPI not yet capturing full shock:<\/strong> The latest inflation data has yet to fully reflect the energy crisis from the Middle East conflict.<\/li>\n\n\n\n<li><strong>AUD\/USD at 4-year high:<\/strong> The Australian dollar has firmed sharply ahead of the decision.<\/li>\n\n\n\n<li><strong>ASX 200 under pressure:<\/strong> Australian stocks have fallen in eight of the past nine sessions before the meeting.<\/li>\n\n\n\n<li><strong>Sector divide:<\/strong> Banks and insurers benefit from higher rates, while miners face headwinds.<\/li>\n<\/ul>\n\n\n\n<p>The Reserve Bank of Australia is widely expected to deliver another interest rate hike when its meeting concludes on May 5, particularly in the face of mounting energy-driven inflation stemming from the Middle East conflict.<\/p>\n\n\n\n<p>The RBA is anticipated to raise interest rates by 25 basis points to 4.35% \u2014 its third such move this year. The hike will return rates to levels last seen in late 2024 and will completely unwind the brief easing cycle witnessed in 2025.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Inflation Resurgence Demands Action<\/h2>\n\n\n\n<p>The central bank has maintained a largely hawkish posture in the face of a late-2025 resurgence in inflation. Rising oil and energy prices, driven by the Middle East war, are expected to have intensified this rebound in price pressures.<\/p>\n\n\n\n<p>Recent inflation data also showed core inflation remaining well above the RBA&#8217;s 2% to 3% annual target.<\/p>\n\n\n\n<p>However, analysts expect the RBA to pivot to a more neutral stance after May&#8217;s rate increase, with higher rates affording the central bank greater room to wait and observe the full inflationary fallout of the Middle East conflict.<\/p>\n\n\n\n<p>While RBA Governor Michele Bullock has not explicitly signaled additional rate hikes, she has consistently championed keeping policy firmly restrictive. Recent indications of continued tightness in the Australian labor market also provide the RBA with more headroom to push rates higher.<\/p>\n\n\n\n<p>March consumer price index inflation data has yet to fully capture the energy shock unleashed by the Middle East conflict.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Will AUD\/USD React?<\/h2>\n\n\n\n<p>The Australian dollar has rallied sharply on the back of the RBA&#8217;s rate-hike activity, with the AUD\/USD pair sitting near a four-year high heading into the May decision.<\/p>\n\n\n\n<p>Higher rates traditionally support the Aussie by drawing more investors toward Australian government bonds and bank deposits, while also discouraging capital outflows from the country.<\/p>\n\n\n\n<p>However, a stronger Aussie stands to weigh on economic growth, particularly given that it reduces the returns on Australia&#8217;s key commodity exports.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Will the ASX 200 React?<\/h2>\n\n\n\n<p>Australian equities have largely struggled in the face of the RBA&#8217;s rate hikes, given that higher rates typically apply pressure to risk-driven markets. A softer growth outlook for Australia also diminishes the appeal of local stocks.<\/p>\n\n\n\n<p>The ASX 200 fell in eight of the nine sessions leading up to the RBA&#8217;s May decision and is likely to come under further pressure if the central bank maintains its hawkish rhetoric.<\/p>\n\n\n\n<p>While sectors such as banks and insurers tend to benefit from higher rates, heavyweight names such as miners are typically dealt a negative blow.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways Hike widely expected: The RBA is anticipated to raise rates by 25 basis points to 4.35% on May 5 \u2014 its third hike of the year. Easing cycle reversed: The move will fully unwind the brief easing cycle of 2025 and return rates to late-2024 levels. Inflation alarm bells: Core inflation remains well &hellip;<\/p>\n","protected":false},"author":9,"featured_media":70959,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6827,49,37,36],"tags":[9757],"class_list":["post-126633","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-daily-economic-reports","category-economic-reports","category-forex-markets","category-market-updates","tag-rba-minutes"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=126633"}],"version-history":[{"count":1,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126633\/revisions"}],"predecessor-version":[{"id":126634,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126633\/revisions\/126634"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/70959"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=126633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=126633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=126633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}