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Wealth Pi Fortnightly Economic Snapshot
Interest Rates
On the 17th of March the RBA increased the official cash rate by 0.25%. The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 4.10%. The next RBA Board meeting and Official Cash Rate announcement will be on the 5th May 2026.
RBA
As at the 15th of April, the ASX 30 Day Interbank Cash Rate Futures May 2026 contract was trading at 95.76, indicating a 67% expectation of an interest rate increase to 4.35% at the next RBA Board meeting.
The decision was closely divided, five board members voted to hike while four voted to hold, reflecting genuine uncertainty about the pace of tightening. Market pricing and major bank forecasts point to at least one further hike in May, with the Q1 2026 CPI release in late April a key determinant of the decision.
The path ahead remains highly data-dependent but sustained above-target inflation and persistent energy price pressures suggest a higher-for-longer rate environment through 2026.
Australian Markets
Australia’s economic momentum has continued into the first quarter of 2026, although growth is moderating. The IMF forecasts GDP growth of 2.0% for 2026, while the effects of earlier monetary tightening continue to weigh on household demand and business activity.
The labour market remains resilient with the unemployment rate steady at 4.3% in March 2026, a slight cooling of the unemployment from the low of 4.1% with more people entering the jobs market due to the higher cost of living and underemployment is rising.
Some economists have been discussing a potential for a recession with worsening forecasts on employment and high inflation, however noting that current economic data is not indicating this.
On the fiscal front, the 2025–26 budget deficit is now forecast at $36.8 billion, down from the $42.1 billion projected earlier in the year, while net debt is estimated at a manageable 20.1% of GDP. Australia also retains its AAA sovereign credit rating from the major agencies. Legislated income tax cuts due from 1 July 2026 should provide some support to household disposable incomes. While higher interest rates continue to weigh on budgets and investment, current data suggest the economy is slowing rather than moving toward outright contraction.
Inflation is expected to ease only gradually. The RBA has indicated that underlying inflation is likely to remain above the 2–3% target band until early 2027, highlighting that disinflation is underway but will likely be uneven and prolonged.
Global Markets
The global outlook has shifted materially since the start of the year. In its April 2026 World Economic Outlook briefing, the IMF noted that the global economy had been on track for a modest upgrade before conflict in the Middle East disrupted that trajectory. Under the IMF’s reference scenario, which assumes a relatively short-lived conflict and a 19% rise in energy prices in 2026, global growth is now projected at 3.1% this year, while global headline inflation rises to 4.4%. Under a more adverse scenario, global growth could weaken to as low as 2.5%.
Downside risks continue to dominate the outlook. A more prolonged conflict, deeper geopolitical fragmentation, or renewed trade tensions could all weaken growth further and generate additional volatility across financial markets. For Australia, the implications are mixed. As a major exporter of LNG and coal, higher energy prices can support national income and export earnings. At the same time, Australia remains heavily reliant on imported refined petroleum, meaning higher fuel costs would still flow through to domestic consumers and businesses.
Property
Australia’s residential property market has remained resilient overall, although conditions are becoming more uneven across regions. Demand continues to be supported by structural housing undersupply, population growth and tight rental conditions, but higher borrowing costs are placing a firmer ceiling on price growth in the larger eastern capitals.
Sentiment appears softer. Affordability constraints and elevated interest rates are weighing on buyer confidence, particularly in Sydney and Melbourne, where price momentum has become more subdued. By contrast, relative affordability and tighter supply continue to support conditions in markets such as Perth, Brisbane and Adelaide.
Rental markets remain extremely tight. The national vacancy rate fell to 1.1% in February 2026, with rental conditions continuing to tighten across most capital cities. This ongoing imbalance between supply and demand continues to support rents and provide broader support to dwelling values, even as higher financing costs temper the pace of capital growth.
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