The RBA sets the cash rate based on six key indicators: CPI inflation, core inflation, unemployment, GDP growth, home prices, and wage growth. These metrics most directly signal the likely direction for rates. The Board also weighs global conditions, household debt, and financial stability, but the six core measures drive most decisions.
Economic Highlights
- Inflation eased from recent peaks but remains above the RBA's 2-3% target band
- Core inflation is up from last year, keeping pressure on the RBA
- Unemployment rose from 4.1% and GDP growth slowed to 0.3%
Inflation (CPI)
Consumer Price Index measuring changes in the cost of living. Both headline and core (trimmed mean) inflation are measured monthly, comparing to the same month last year.
Headline Inflation (YoY)
6 Months Ago
Core Inflation - Trimmed Mean (YoY)
6 Months Ago
Headline Inflation Trend (Monthly)
💡Expert Insights
Key Takeaway
The monthly move cooled a lot, but yearly inflation is still running well above target, so the RBA will want more proof prices are easing.
What's Happening
Headline inflation is at 4.2% in April 2026, down from 4.6% in March but still above the RBA’s 2-3% target. It’s higher than 3.6% a year ago and 3.7% six months ago. Monthly price growth slowed to 0.4% after 1.1% in March.
Impact on Borrowing
At 4.2%, inflation is still too high for the RBA to feel comfortable cutting rates. That keeps borrowing costs under pressure for households and businesses.
Unemployment Rate
The share of Australians who want work but can’t find a job.
Current Value
Quarterly Change
rose to a higher level
Same Time Last Year
April 2025
💡Expert Insights
Key Takeaway
The rise from 4.1% to 4.5% means the labour market is loosening, but it is still not weak enough on its own to force the RBA’s hand.
What's Happening
The unemployment rate rose to 4.5% in April 2026, up from 4.1% a year ago and 4.3% six months ago. It has also edged up from 4.1% in January to 4.5% now.
Impact on Borrowing
A higher jobless rate can give the RBA room to keep rates steady or cut them if the labour market keeps cooling. For borrowers, that can ease mortgage pressure over time.
GDP Growth
GDP growth shows how much the Australian economy is growing or shrinking over time.
Current Value
Quarterly Change
Growth rate for this period
Same Time Last Year
2025-Q1
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Key Takeaway
The economy is still growing, but only barely. That points to soft momentum rather than a strong recovery.
What's Happening
Latest annual GDP growth is 0.3% in 2026-Q1, down from 0.9% in 2025-Q4 and 1.0% in 2025-Q2. It is sitting at the same level as a year ago and slightly below six months ago.
Impact on Borrowing
Growth this weak keeps the RBA focused on supporting the economy. That can help keep borrowing costs from rising, and may leave room for rate cuts if inflation stays within the 2-3% target.
Home Prices
The average price of a house across Australia, based on ABS data.
Current Value
Quarterly Change
rose by 2.0%
Same Time Last Year
2025-Q1
💡Expert Insights
Key Takeaway
House prices are still climbing fast enough to add pressure to the housing market, even with the RBA’s 2-3% inflation target in mind.
What's Happening
Mean house prices rose to $1,111 in 2026-Q1, up from $1,089 in the previous quarter and $982 a year ago. That is a $60 lift over six months, or about 5.7%.
Impact on Borrowing
Higher house prices can keep inflation and borrowing pressure firm, which may make the RBA less keen to cut rates quickly. Mortgage repayments can stay heavy for households.
Wage Growth
Wage growth shows how fast pay packets are rising across Australia, compared with a year earlier.
Current Value
Quarterly Change
fell to a lower level
Same Time Last Year
2025-Q1
💡Expert Insights
Key Takeaway
Pay growth has cooled from last year’s pace, but it is still running a bit hot for the RBA’s comfort zone.
What's Happening
Wage growth was 3.3% in 2026-Q1, down from 3.4% in 2025-Q4 and level with 2025-Q3. It is well below 4.1% a year ago and has been sitting around 3.3%-3.4% for six months.
Impact on Borrowing
With wage growth above the RBA’s 2-3% inflation target, it can keep pressure on rates. Stronger pay rises can make it harder for borrowing costs to fall quickly.
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Frequently Asked Questions
The RBA primarily uses six indicators: CPI inflation, core inflation (trimmed mean), unemployment rate, GDP growth, home prices, and wage growth.
