Reserve Bank of Australia Statement comparison — 9 December 2025 vs 5 May 2026
This Reserve Bank of Australia statement comparison covers 9 December 2025 and 5 May 2026. Overall, the newer document was more hawkish. The RBA has crossed from a hawkish hold to an outright hike, driven by stronger and more persistent inflation and a tight labour market. The Board signals a likely pause to assess the shock, but the balance of risks remains skewed toward further tightening if inflation does not decelerate as expected.
What changed
More hawkish. The RBA has crossed from a hawkish hold to an outright hike, driven by stronger and more persistent inflation and a tight labour market. The Board signals a likely pause to assess the shock, but the balance of risks remains skewed toward further tightening if inflation does not decelerate as expected.
- Inflation — More hawkish. Inflation assessment sharpened from 'a bit stronger than expected' with some persistence to explicit warnings about second-round effects, de-anchored expectations, and a higher expected peak of 4.8%.
- Labour Market — More hawkish. Labour market framing shifted from 'evolved broadly as expected and remains a bit tight' to a confirmed driver of economy-wide capacity pressures, feeding inflation and giving workers bargaining power.
- Rate Path — More hawkish. The policy stance moved decisively from holding at 3.6% with the possibility of a hike to actually raising the cash rate by 25bp, with the Board seeing policy as 'a bit restrictive' but leaving room for further hikes if inflation persists.
- Balance Sheet — More hawkish. Risk balance shifted from 'tilted a bit to the upside' to 'all shifted to the upside', citing second-round effects and the oil shock's impact on inflation, while noting downside demand risks as secondary.
Key wording
the Board decided to leave the cash rate unchanged at 3.6 per cent.
Inflation came in a bit stronger than expected in the September quarter. Some of this looked to be temporary factors but there were signs of persistence in some items.
The Board therefore assessed that the balance of risk to inflation had tilted a bit to the upside.
We didn’t consider the case for a rate cut at all.
the Board might have to consider whether or not it’s appropriate to keep interest rates where they are or in fact at some point raise them.
The labour market has evolved broadly as expected and remains a bit tight.
Today, as you know, the Board decided to raise the cash rate by 25 basis points.
If left unchecked, higher costs get embedded into price and wage setting decisions. These second-round effects could lead to even higher and persistent inflation and if so would require even more tightening in monetary policy to get inflation under control.
The Board now judges the level of the cash rate to be a bit restrictive, which will help to address the risk that inflation will be higher and more persistent once the current prices shock passes through the economy. This gives the Board space to see how the conflict plays out and the response of Australian households and businesses to the shock.
we feel we’re now in a position where we’ve got space to be alert now to both sides of the risks: inflation and the potential risks to the downside if the war continues.
It’s quite possible that we wouldn’t have had to increase interest rates a third time if the shock hadn’t occurred, but the fact is the shock did occur.
The most recent data have confirmed that some of the increase in inflation was being generated by economy-wide capacity pressures including ongoing tightness in the labour market.
Official documents
Background reading
Related
9 December 2025 statement · 5 May 2026 statement · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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