Inflation to peak in mid-2026 before it rebalances: RBA

Reserve Bank of Australia (RBA) expects inflation to peak in mid-2026 and moderating to a little above the midpoint of the 2-3% range by mid-2028 as the economy returns to balance.

- Riddhima Talwani

RBA head of economic analysis department Michael Plumb struck a slightly more positive tone than the RBA board gave off in the Statement on Monetary Policy.

Plumb said the central bank believes inflation has been driven higher by sector-specific pressures, which it expects will ease in the coming quarters.

Inflation had eased gradually from its peak in late 2022, falling to 2.7% in the June quarter of 2025. However, it unexpectedly picked up pace mid last year, prompting the RBA to raise interest rates in February to 3.85% in a bid to reign it in.

The RBA had either cut or kept the cash rate on hold in the prior 17 consecutive meetings.