The Reserve Bank of Australia (RBA) is likely to keep the policy rate unchanged at its March meeting, but May remains a ‘live’ option, according to GSFM investment specialist Stephen Miller. This assessment follows the latest Consumer Price Index (CPI) release, which Miller believes aligned with the RBA’s existing expectations. The current RBA forecast anticipates trimmed-mean CPI inflation at an annual 3.7 per cent to the June quarter 2026, implying approximately 0.9 per cent in both the March and June quarters. GSFM is a global investment management firm offering a range of investment solutions. They partner with investment managers from around the world to provide Australian investors with access to diverse strategies and expertise.
Miller suggests that the crucial question revolves around whether achieving the RBA’s forecast will prevent further rate hikes, particularly if the labour market remains stable. RBA Governor Michele Bullock acknowledged the increasing complexity of monetary policy decisions during a recent discussion. Bullock suggested a ‘patient’ approach to decision-making is appropriate, given the uncertainty surrounding the balance of risks between inflation and the labour market.
According to Miller, these comments indicate that the RBA monetary policy board is currently inclined to maintain the current policy rate when they convene in March. However, the May meeting remains a viable option for adjustments. A patient strategy would allow the RBA to evaluate the implications of additional inflation data and gain insights into other potential drivers of inflation.
This approach provides the central bank with time to assess the broader economic landscape before making further policy adjustments. The RBA’s decisions will likely depend on incoming data and a comprehensive understanding of the factors influencing both inflation and the labour market.
