Why the RBA is predicted to deliver a third straight interest rate hike this week
Economists expect the Reserve Bank of Australia (RBA) to deliver a third consecutive interest rate hike to reinforce its commitment to controlling inflation. While rate increases cannot address oil price surges caused by Middle East tensions, they remain the RBA's primary tool to manage inflation expectations. The move aims to prevent broader economic pass-through of higher fuel costs despite potential strain on households.
- ▪The RBA is nearly 80% likely to raise interest rates for the third straight time, according to financial markets.
- ▪Inflation in Australia rose to 4.6% in the year to March 2026, driven largely by a over 30% spike in petrol prices.
- ▪Economists argue the RBA must act to maintain credibility, even though monetary policy cannot influence global oil supply shocks.
- ▪Higher interest rates aim to dampen demand and prevent businesses from passing on increased costs to consumers.
- ▪The RBA’s previous rate hike passed by a narrow 5-4 vote, but analysts expect broader support this time.
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Economists believe a likely interest rate rise by the RBA will be the best way to show the bank will get inflation under control. Photograph: AAPView image in fullscreenEconomists believe a likely interest rate rise by the RBA will be the best way to show the bank will get inflation under control. Photograph: AAPInterest ratesAnalysisWhy the RBA is predicted to deliver a third straight interest rate hike this weekPatrick ComminsWhile interest rate rises can’t affect the surging price of oil caused by Middle East turmoil, they are still the Reserve Bank’s best – and only – tool to fight inflation Follow our Australia news live blog for latest updates Get our breaking news email, free app or daily news podcast Sun 3 May 2026 11.00 EDTLast modified on Sun 3 May 2026 11.01 EDTShareOne…
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