Key Factors for Fixed Income in Light of RBA’s Rapid Policy Changes

RBA Leads with Consecutive Rate Increases Amid Inflation Concerns

Back in May 2022, the Reserve Bank of Australia (RBA) was one of the last major central banks to start raising interest rates as part of the global post-pandemic tightening phase. Fast forward to the first quarter of 2026, and the RBA has taken a proactive stance against inflation, becoming the first major central bank to deliver back-to-back 25 basis point rate hikes in both February and March. This move pushed the cash rate target up from 3.6% to 4.1%, a level not reached since May 2025.

The RBA’s decision was largely influenced by inflation that remained stubbornly above its target, as well as ongoing energy supply disruptions stemming from continued conflict in the Middle East. These factors combined to prompt a swift policy response from the central bank.