Prior to the conflict in the Middle East, inflation in Australia was materially above target, and the economy and labour market were operating with ongoing capacity pressures. GDP growth picked up strongly in the December quarter 2025, as expected, to be above estimates of the potential rate of growth. Labour market outcomes have been broadly as expected recently and conditions remain somewhat tight. The conflict has led to sharp increases in commodity prices, particularly energy, which has pushed inflation higher. This has contributed to market expectations for the cash rate shifting higher. Large increases in fuel ... (full story)