RBA Rate Decision (May 5, 2026)

The RBA raised rates twice in a row in 2026 in February and March, now rate is at 4.10%. The March decision was a narrow 5 to 4 vote. May 5 is the next decision, and markets are split on whether we get a third hike.

Markets are pricing a 77% chance of a May hike, driven by RBA Deputy Governor Hauser's firm focus on keeping inflation under control. Commonwealth Bank and UBS both expect another 25 basis point rise, which would take the cash rate to 4.35%.

However, some economists think the RBA may pause to see how the two recent hikes are flowing through to households.

AUD/USD pair Analysis

A hike would give Australia the highest central bank rate in the entire G10, making the Australian dollar more attractive to global investors. This contrasts with growing pressure on the US Fed to cut rates, a divergence that tilts the balance of risks against the US dollar.

• Hike → AUD/USD likely pushes higher toward 0.71 – 0.73
• Pause → Short-term AUD selloff, pair likely drops back toward 0.69

Bottom Line

The May 5 decision is a genuine market mover. The base case is a hike, which is bullish for AUD. But the close board split in March means a surprise pause is on the table. Expect sharp volatility around the 6:30 AM CET announcement.