RBA: Not so fast

Research evidence excerpt

RBA: Not so fast

J P M O R G A N Economic Research

16 June 2026

The RBA was on hold today at 4.35% in a 9-0 decision. The spirit of last month's Australian and New Zealand Interest

comments setting up an extended pause remained largely in place "following the Rate Strategy

three increases in the cash rate… financial conditions are now tighter… it was Ben K Jarman

appropriate to leave the cash rate target unchanged while it (the board) assesses the (61-2) 9003-7982

response". ben.k.jarman@jpmorgan.com

J.P. Morgan Securities Australia Limited

With May’s message (see here and here) steadily sinking in to markets over the last

month and a half, a significant yield rally pushes the leadership forward to the next

comms challenge of ensuring consensus doesn't get too far ahead of itself (next

move is lower etc). The concluding sentence reminds that a hiking bias remains in

place, and the board "will do what it considers necessary… including increasing

the cash rate further if required". Apparent progress on the Middle East is also

downplayed: "there are plausible scenarios where inflation is higher and activity

lower than envisaged under the May baseline forecasts."

We had noted in our preview that after the recent repricing, this meeting would

involve some pushback against the idea that the cycle is definitely over, because

the leadership wants to keep the reins taut. Our forecast though remains that the

cycle is indeed done, given the trajectory of the data. 2Q CPI is in our view tracking

below the May SoMP forecasts and though that may not be the end of cost pass-

through, it should mark the period of most intense risk, given that demand and

pricing power is fading. The market won't have to wait long for an update on that