The minutes show the board weighed two live options at the meeting: holding the cash rate at 4.10% or raising it by 25 basis points to 4.35%.[2] The RBA's 5 May decision statement said the final vote was eight members in favour of the increase and one for no change, fully reversing the easing delivered in 2025.[3]
Board members said the case for leaving policy unchanged rested on uncertainty over how a prolonged Middle East conflict would affect demand, inflation and longer-term inflation expectations.[4] They also noted that two earlier rate increases in 2026 meant financial conditions might already have been close to restrictive enough if the conflict eased quickly.[5]
Most members nevertheless judged the case for tightening was stronger because underlying inflation was projected to remain above the RBA's 2% to 3% target band across a range of scenarios, while higher fuel and commodity prices were already feeding into the inflation outlook.[6]