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
- Headline inflation up from 3.4% to 4.6% - above the RBA’s 2-3% band
- Core inflation holding at 3.3% - still a touch above the RBA target
- Unemployment down from 4.1% to 4.3% as GDP growth lifts to 0.8%
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)
Core Inflation Trend (Monthly)
💡Expert Insights
Key Takeaway
The big signal is the recent jump from 3.7% to 4.6% - inflation is moving the wrong way again, not easing towards the target band.
What's Happening
Inflation is at 4.6% in March 2026, up from 3.8% six months ago and 3.2% a year ago. It also jumped from 3.7% in February after being flat month-on-month the month before, so price pressure has picked up again.
Impact on Borrowing
At 4.6%, inflation is still above the RBA’s 2-3% target, so the RBA is likely to stay cautious on rate cuts. That keeps borrowing costs for mortgages and loans under pressure.
Unemployment Rate
The unemployment rate is the share of Australians who want work, are available to start, and are still looking for a job.
Current Value
Quarterly Change
fell to a lower level
Same Time Last Year
March 2025
12-Month Trend
💡Expert Insights
Key Takeaway
Unemployment has edged up a bit and then levelled off, so the labour market looks a touch softer than it did a few months ago.
What's Happening
The rate is 4.3% in March 2026, up from 4.1% in January and the same as February. It is also higher than 4.1% a year ago and six months ago.
Impact on Borrowing
A higher unemployment rate can give the RBA more reason to keep rates steady or cut them, since weaker labour market conditions can ease inflation pressure.
GDP Growth
GDP growth measures how much Australia’s economy is expanding or shrinking over time, based on ABS data. It shows whether people and businesses are spending, producing, and earning more or less.
Current Value
Quarterly Change
Growth rate for this period
Same Time Last Year
2024-Q4
12-Month Trend
💡Expert Insights
Key Takeaway
The economy is growing, but only modestly. That usually means less pressure on the RBA to tighten policy, especially if inflation keeps cooling.
What's Happening
Latest GDP growth is 0.8% in 2025-Q4, up from 0.5% in 2025-Q3 and the same as 2025-Q2. It is higher than 0.4% a year earlier, so growth has picked up from last year’s pace.
Impact on Borrowing
Growth at 0.8% is not hot enough to force the RBA to lift rates on its own. If growth stays modest and inflation moves toward the RBA’s 2-3% target, borrowing costs are more likely to stay steady or ease.
Home Prices
The average price of all houses sold across Australia, based on ABS data.
Current Value
Quarterly Change
rose by 2.7%
Same Time Last Year
2024-Q4
12-Month Trend
💡Expert Insights
Key Takeaway
Mean house prices are climbing steadily, and the latest reading is well above both six months ago and a year ago.
What's Happening
Mean house prices rose to $1,075 in 2025-Q4, up from $1,046 in 2025-Q3 and $1,030 six months ago. They are up from $962 a year ago.
Impact on Borrowing
Rising house prices can keep pressure on inflation and may make the RBA less willing to cut rates quickly. Higher prices can also mean bigger mortgages and higher repayments.
Wage Growth
Wage growth shows how fast pay packets are rising across Australia, measured by the ABS as the yearly change in wages.
Current Value
Quarterly Change
rose to a higher level
Same Time Last Year
2024-Q4
12-Month Trend
💡Expert Insights
Key Takeaway
Pay rises are still strong, but they have eased from last year and are now moving sideways around 3.4%.
What's Happening
Wage growth is at 3.4% in 2025-Q4, up from 3.3% last quarter and flat from 3.4% in both 2025-Q2 and 2025-Q1. It is down from 4.0% a year ago.
Impact on Borrowing
At 3.4%, wage growth is still above the RBA’s 2-3% inflation target, so it can keep some pressure on interest rates and borrowing costs.
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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.
