Rates are on hold but inflation is still too high and the RBA says more hikes remain on the table.
The Reserve Bank of Australia held the cash rate at 4.35 per cent today, pausing after three consecutive rate rises since the start of 2026. It is not a signal that the tightening cycle is over. It is a signal the Board is watching and waiting.
The decision was unanimous. The Board acknowledged that inflation remains too high, with headline and underlying inflation both elevated. Global oil supply disruption has fed directly into fuel prices, and that pressure is now passing through to the broader cost of goods and services across the economy.
Financial conditions have already tightened in response to the three rate increases this year. Bond yields are up, the exchange rate has appreciated, and there are early signs consumer spending is slowing. Housing prices have fallen in some capital cities.
But the RBA was explicit: if inflation does not respond as expected, further rate increases remain on the table.
What’s happening in hiring
For employers, today’s pause lands in an already complicated labour market.
Matthew Dickason, CEO of Hays APAC, says the hold reinforces what the recruitment firm is already observing on the ground.
“After three consecutive rate hikes, today’s decision to leave the cash rate unchanged reinforces what we’re seeing in the labour market. Conditions remain resilient, but employers are continuing to hire cautiously amid ongoing economic uncertainty,” Dickason said.
Recent ABS data showed job vacancies rose in the March quarter compared with the previous quarter. The Hays Salary Guide FY26/27 found 58 per cent of employers expect to increase headcount over the next 12 months, suggesting demand for workers is holding up broadly, even as businesses become more selective about where and how they add staff.
Flexibility is increasingly the preference, with employers leaning toward freelance and contract arrangements rather than permanent hires.
Workers are sitting tight
On the other side of the market, professionals are taking a cautious approach to career moves, and that caution has implications for employers trying to attract talent.
Hays research found that 38 per cent of professionals are planning no career changes in the next 12 months. The striking detail is that half of those same workers feel underpaid.
“That means employers may need to work harder to attract talent even as hiring activity continues, while for jobseekers, opportunities remain available, particularly in areas facing ongoing skills shortages,” Dickason said.
For small business owners, this creates a specific challenge. Workers who feel underpaid but are not actively looking will not respond to a standard job ad. Retention becomes as important as recruitment, and salary conversations cannot be deferred indefinitely.
What employers should do now
The RBA’s pause does not mean conditions are easing. Borrowing costs remain elevated, inflation is still running hot, and the Board has signalled it will act again if needed.
For SME owners, the practical takeaway is straightforward. Hiring is still possible and vacancies exist, but the environment rewards selectivity and planning. If headcount growth is on your agenda for the next 12 months, understanding where skills shortages are acute, and what it takes to retain the people you already have, matters more now than it did a year ago.
The RBA will continue to monitor inflation, labour market conditions, and global developments before its next decision. For businesses, the window between now and that next move is the time to get clarity on costs, workforce structure, and what financial conditions in late 2026 might actually look like.
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