The Reserve Bank of Australia (RBA) has hiked the cash rate amid material risk inflation will remain above target for longer than previously anticipated.
The 0.25% rate hike takes the cash rate to 4.35%, and is set to lift the average rate for a new owner occupier home loan to around 6.25% p.a.
Savings account customers stand to gain from any rate hikes that occur, although there's no guarantee banks will pass any rate increases on to savings accounts in full. But if the banks do hike by 0.25%, the average bonus savings account rate would increase to about 4.75% p.a.
Keep an eye on how your bank or lender is responding:
- RBA rate hike May 2026: Is your lender passing it on?
- Which banks are lifting savings rates after the RBA May rate rise?
That's a wrap
Published 4:55pm, Tuesday
That's all for our live coverage of the RBA's May cash rate decision.
Savings.com.au will continue to provide regular updates on home loan and savings account interest rate increases as they are announced via these pages:
- Home Loans: RBA rate hike May 2026: Is your lender passing it on?
- Savings Accounts: Which banks are lifting savings rates after the RBA May rate rise?
Rate hike expected, but 'doesn't make it any easier': Chalmers
Published 4:45pm, Tuesday
Federal treasurer Jim Chalmers said his government understands that people are under pressure and that's why it is rolling out "responsible cost of living relief".
The measures he referred to are temporary cuts to the fuel excise and heavy road user charge, cheaper medicines and more bulk-billed doctor visits, two more rounds of tax cuts, and a $1,000 instant tax deduction.
These initiatives are already in place or have been announced prior to next Tuesday's federal Budget.
Dr Chalmers also said if it wasn't for the spike in petrol prices, inflation would have gone down in March.
He said the upcoming Budget will be "focused on fuel security, addressing inflation, boosting productivity and resilience, and managing global economic uncertainty".
"Today's [cash rate] decision highlights why this is so important," Dr Chalmers said.
The federal Budget is due to be handed down on Tuesday, 12 May.
'We have a supply problem': Bullock
Published 4:35pm, Tuesday
RBA governor Michelle Bullock says there needs to be a slowing in demand to match supply in the Australian economy.
"We can't get substantial growth without hitting capacity," she told a media conference.
Ms Bullock said part of this was ensuring real wages didn't grow too far.
Earlier, she said the RBA had raised interest rates to slow demand growth which had been outpacing supply growth before the conflict in the Middle East.
She also alluded to the role of government stimulus in fuelling demand which could be seen as timely in the run-up to next week's federal Budget.
"All I'm saying is that the extent to which the government make up the shortfalls for households by giving more, it makes it harder to dampen demand," Ms Bullock said.
Employment will still grow: Bullock
Published 4:12pm, Tuesday
RBA governor Michele Bullock said the monetary policy board hasn't forgotten the other part of its mandate: to maintain full employment.
Ms Bullock said having a job is important to Australians for many reasons, including self-esteem and the "way they see themselves".
The jobs market has remained tight for some time with the latest unemployment figure at 4.3%.
But she said the RBA's dual mandate to achieve low and stable inflation AND full employment does not mean equal weight is always given to both.
"It depends a little bit on where we think the relative risks lie," she said.
"But we do have to pivot, depending on where the risks are."
'Yes, it's hard' for households: Bullock
Published 4:08pm, Tuesday
RBA Governor Michelle Bullock acknowledges it's tough for households to cop a third consecutive interest rate increase in 2026.
But she said inflation is also hurting all Australians and needs to be brought under control.
The board currently expects inflation to peak at 4.8% in June and come down from there although she said uncertainty remains surrounding the war in the Middle East.
Earlier, she said part of the problem was the war had arrived at a time inflation was already running hot and has made the trade-off between higher inflation and lower economic growth much more complicated.
Inflation was already a problem before oil shock
Published 3:50pm, Tuesday
RBA governor Michele Bullock said it was possible the board wouldn't have raised interest rates for a third time in 2026 had it not been for the war in the Middle East.
But she said the oil shock has made the outlook more complicated.
It has also increased inflationary pressures as elevated fuel prices flow on to other sectors of the economy.
She said even if oil prices go back to their pre-war levels rapidly, the inflationary effects will still impact the Australian economy for some time.
Governor Bullock says 'Australians are poorer'
Published 3:45pm, Tuesday
Ms Bullock says Australians and people globally are poorer because of the shock of fuel prices that have effectively lowered incomes.
She acknowledges there is some risk of recession should the conflict in the Middle East be prolonged but the board is well aware of those risks.
She assured they would be closely assessed at each monetary policy meeting.
RBA Governor's media conference underway
Published 3:40pm, Tuesday
RBA Governor's media conference underway.
Reserve Bank Governor Michele Bullock is now fronting the media, stressing the board felt it was imperative to control inflation with another cash rate increase.
She stressed the flow-through of higher fuel prices has the potential to further blow out inflation into the future.
Ms Bullock acknowledged the board sees the current cash rate to be "a bit restrictive" but this will give the board room to assess future developments.
She is now taking questions from the media.
Housing demand expected to fall
Published 3:30pm, Tuesday
Housing market analyst Cotality says the latest tightening from the RBA is likely to further dampen overall housing demand, a trend that has been evident since late 2025.
Cotality says today's third consecutive cash rate hike for 2026 effectively wipes out the three decreases to the cash rate in 2025.
It notes demand was already impacted by affordability and serviceability constraints prior to the rate hikes in February and March.
Cotality said buyer sentiment has dropped sharply, even amid ongoing housing undersupply.
It forecasts market conditions will continue to moderate from here.
"With upside risk to inflation in the near future, there remains the potential for further rate hikes," it said.
First banks respond to cash rate hike
Published 3:25pm, Tuesday
Macquarie Bank and NAB-owned Ubank are the first banks to respond to Tuesday's cash rate increase.
Macquarie Bank will increase its variable home loan rates and those on its savings and transaction accounts by 0.25% p.a. effective from 22 May 2026.
Ubank will increase the Welcome Rate for new customers and Everyday Bonus Rate, both by 0.25%, on its High-Interest Savings Account from 12 May.
RBA governor to face the media
Published 3:15pm, Tuesday
Reserve Bank of Australia governor Michele Bullock is due to address a media conference following today's decision to hike the cash rate at 3:30pm AEST. (3:00 pm Australian Central Standard Time and 12.30 pm in Western Australia.)
Home building sector warns of supply pressures
Published 3:00pm, Tuesday
The Housing Industry Association has warned today's cash rate hike will further restrict the supply of new homes at a critical time for housing policy.
The Association's Tim Reardon says while monetary policy has an important role in managing inflation, higher interest rates increase the cost of financing new homes and make it more difficult to bring new housing projects to market.
“As a result, this decision is likely to reduce the number of new homes commencing construction at precisely the time Australia needs more housing supply," Mr Reardon said.
He said it places more responsibility on next week's federal Budget to lower the cost of building new homes and ensure supply is not constrained.
"The only sustainable way to reduce housing costs is to lower the cost of delivering a new home," he said.
“This means reducing the taxes, charges and regulatory barriers that add to the cost of new housing.”
Uncertain outlook
Published 2:55pm, Tuesday
In its Statement of Monetary Policy, the board acknowledges heightened uncertainties about the outlook for domestic economic activity and inflation.
It says with the conflict in the Middle East continuing, there are plausible scenarios where inflation is higher and activity lower than the board has forecast.
That baseline forecast is based on the conflict resolving soon and fuel prices declining.
However, a longer or more severe conflict could put further upward pressure on global energy prices, pushing up near-term inflation and also increasing inflation further as the costs are passed through, the statement says.
It notes higher prices and prolonged uncertainty may cause growth to be lower in Australia's major trading partners, as well as in Australia.
High inflation likely to persist: RBA
Published 2:45pm, Tuesday
The accompanying Statement of Monetary Policy noted developments in the Middle East are having an impact on inflation.
Higher fuel prices are adding to inflation, with the Statement saying there are indications this is likely to have second-round effects on prices for goods and services more broadly.
The board assessed inflation is likely to remain above its target of 2-3% for some time and it was, therefore, judged appropriate to increase the cash rate.
The Statement of Monetary Policy also says the board will be attentive to the data and pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
It reiterates monetary policy is well placed to respond to developments given the cash rate has now been raised three times in 2026.
The Board has restated focus on its mandate to "deliver price stability and full employment".
Eight votes for hike, one vote hold
Published 2:40pm, Tuesday
The RBA reports eight members of the nine-member monetary policy board voted in favour of increasing the cash rate to 4.35% in May.
One member voted to leave it unchanged at 4.10%.
RBA hikes cash rate to 4.35%
Published 2:30pm, Tuesday
The Reserve Bank of Australia has decided to raise the cash rate by 25 basis points to 4.35% (up from 4.10%).
It's the third hike to the cash rate for 2026, following increases in both February and March.
RBA May cash rate decision imminent
Published 2:25pm, Tuesday
The RBA board will publish its post meeting statement in about five minutes, and no doubt many Aussies (including this journo) are holding their breath. Once the meeting's outcome is announced at 2:30pm AEST, the market will have an hour to digest the news before RBA governor Michele Bullock fronts the press at 3:30pm AEST.
Not everyone is on board for a rate increase
Published 2:20pm, Tuesday
Despite widespread belief the Reserve Bank will raise the cash rate today, some economists and commentators believe it could be a mistake to raise the cash rate in May.
Some economists point out the spike in inflation is largely driven by higher fuel prices and raising interest rates will do nothing to address this root cause.
Others argue the February and March interest rate hikes have also not had a chance to flow through the economy as yet.
Those urging the Reserve Bank to hold interest rates also point to low consumer confidence which could lead to a collapse in spending with a third consecutive rise to the cash rate.
However, those calling for a hold to the cash rate in May are in the minority.
Commentators expect the RBA's monetary policy board to deliver another split decision today.
The March vote was 5-4 in favour of raising the cash rate, the closest margin since voting numbers have been published, beginning in 2025.
What could an RBA hike mean for savers?
Published 2:15pm, Tuesday
For people with cash to put in savings accounts or term deposits, a 25-basis point hike will see many headline rates comfortably over 5.00% p.a.
Indeed, some of the market's highest savings and term deposit rates may well break through the 5.50% p.a. benchmark.
A 5.50% p.a. savings rate would see someone with a $100,000 balance earn around $5,500 year in interest (depending on depositors meeting any conditions of course).
Even at an interest rate of 4.75% p.a., another rate hike would bring in an extra $250 a year.
If your savings account is paying considerably less than these rates, it's worth checking what some of the more competitive rates on the market are paying.
Advertisement: Here are some competitive savings account rates available now:
| Bank | Savings Account | Base Interest Rate | Max Interest Rate | Total Interest Earned | Introductory Term | Minimum Amount | Maximum Amount | Linked Account Required | Minimum Monthly Deposit | Minimum Opening Deposit | Account Keeping Fee | ATM Access | Joint Application | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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0.05% p.a. Bonus rate of 5.30% Rate varies on savings amount. | 5.35% p.a. | $1,097 | – | $0 | $249,999 | $0 | $0 | $0 |
| Promoted | Disclosure | ||||||||
2.25% p.a. Bonus rate of 3.15% Rate varies on savings amount. | 6.00% p.a. Intro rate for 4 months then 5.40% p.a. | $1,134 | 4 months | $0 | $499,999 | $0 | $0 | $0 | Promoted | Disclosure | |||||||||
4.00% p.a. | 5.90% p.a. Intro rate for 4 months then 4.00% p.a. | $936 | 4 months | $0 | $249,999 | $0 | $1 | $0 | Disclosure |
How much could a rate hike cost mortgage holders?
Published 2:00pm, Tuesday
If you have a variable-rate home loan, you might be wondering what a rate hike could mean for your hip pocket.
A 25-basis point increase will see repayments on an average new home loan of $700,000 rise by about $115 per month - or about $1,380 a year.
However, this would come on top of two previous interest rate increases from the February and March RBA meetings which have already been the average home loan repayment rise by around $225 per month so far in 2026.
This would see average monthly repayments rising by $340 a month - or $4,080 a year - in just the first four months of 2026. This would effectively wipe out the three interest rate cuts handed down in 2025.
The data behind today's cash rate call
Published 1:45pm, Tuesday
The RBA's monetary policy board will consider a comprehensive suite of data when making its decision, including the key measure of inflation.
Last week's Consumer Price Index for March put headline inflation at 4.6%, a huge leap from the previous monthly rate of 3.7%.
This was driven largely by blowouts in fuel prices as a result of the ongoing conflict in the Middle East, with the federal government's move to temporarily suspend excise tax on fuel only kicking in on 1 April.
Trimmed mean inflation, which strips out fuel costs and other volatile items, remained at 3.3% in March.
But this doesn't mean the Reserve Bank board won't be taking fuel prices into account in its decision today.
Elevated fuel costs will put inflationary pressure on many other sectors of the economy. Their impact is likely to be central to today's decision.
The RBA will also be taking into account the threat of stagflation - when inflation remains high but productivity goes backwards and unemployment increases.
Global geopolitical conditions routinely form part of the RBA's cash rate deliberation although will likely be more prominent in discussions at the May meeting.
What are experts predicting for today's decision?
Published 1:20pm, Tuesday
The economic teams at each of the big four banks (CBA, Westpac, NAB, ANZ) are unanimous in predicting a 0.25% rate hike for May.
Meanwhile, the market odds of a rate hike are sitting at 74%, according to the latest read from the ASX RBA Rate Tracker.
When will the RBA announce its interest rate decision?
Published 1:15pm, Tuesday
The RBA monetary policy board will deliver its verdict on the cash rate at 2:30pm AEDT.
Those under Australian Central Standard Time (ACST) will receive the news at 2pm while in Western Australia, the decision will be announced at 11:30am AWST.
Welcome: LIVE coverage of the RBA's May cash rate decision
Published 1:00pm, Tuesday
Hello and welcome to Savings.com.au's live RBA cash rate coverage. I'm Denise, Savings.com.au's senior finance journalist, and I'll be with you today giving you the latest on the RBA's May decision, expert and industry commentary, and major banks' and lenders' responses.
PLEASE refresh this page periodically for the latest updates and if you have any questions, hit me up at denise.raward@savings.com.au.