A drop-off in headline CPI was not enough to convince the bond market that the RBA is done raising rates, as markets price in a 60 per cent chance by December.

Forex traders can’t shake the feeling that the Reserve Bank has not finished raising rates, which is keeping the Australian dollar steady for now.

Inflation fell to 4 per cent in May. However, there are signs that underlying price pressures remain a problem for the economy.

Australia's trimmed-mean inflation rose to 3.6% in May 2026, above the RBA's 2-3% target, reinforcing hawkish rate expectations at the 4.35% cash rate.

A drop-off in headline CPI was not enough to convince the bond market that the RBA is done raising rates, as markets price in a 60 per cent chance by December.