The middle of the year usually brings a flurry of economic data, and June 2026 has been no exception. Between a steady cash rate, a softer inflation read, a reshaped fuel excise and a pointed warning to the private credit sector, there is plenty for business owners and finance leaders to take in. We have pulled the threads together here, with a focus on what actually matters when you are weighing up debt, timing an expansion or shoring up working capital.
The RBA holds, but the door stays open
The Reserve Bank left the cash rate at 4.35% in June, and the decision was unanimous. That stability is welcome after a long stretch of uncertainty, but we would caution against reading it as the all clear. The Board was deliberate in keeping the door open to a further increase, noting that the slowdown in the data so far is broadly in line with its own projections rather than evidence that the job is done.
The wildcard is the recent oil shock. Earlier in the year, conflict in the Middle East pushed oil and commodity prices sharply higher, and the Bank has been candid that it does not yet know how much of that cost will feed through into broader prices. If significant pass through appears in the months ahead, another 25 basis point rise as soon as August remains firmly on the table.
For anyone carrying variable rate debt, the practical message is to plan for a cash rate that holds around current levels, with a realistic chance of one more move up before this cycle is genuinely finished. That is a very different planning assumption to betting on cuts arriving soon. It is also a useful moment to look at the mix between fixed and variable across your facilities, since the balance that suited you when cuts looked imminent may not be the balance that suits you now.
Inflation is cooling, which helps the case for patience
The more encouraging news came from the latest inflation figures. The monthly headline rate eased to 4.0% over the year (ABS, May 2026), down from 4.2% and below the market’s expectation of around 4.3%. On a monthly basis the index actually fell 0.1% in seasonally adjusted terms.
A large part of that softness came from the bowser. Automotive fuel prices dropped 11.9% over the month (ABS, May 2026) as the lower fuel excise took effect, and that single factor stripped around 0.4 percentage points off the monthly figure. Strip away the volatile items, though, and the picture is more stubborn. Domestic services inflation picked up to 0.4% for the month (3.8% over the year), food rose 0.5%, and housing costs climbed 0.6% as builders kept passing on higher input costs.
Our read is that underlying inflation is moving roughly as the Reserve Bank expected, with quarterly trimmed mean inflation likely to land near 1.0% for the June quarter. That is close enough to the Bank’s own forecast to support patience, but the persistence in services and housing is exactly why the Board is not ready to declare victory. Domestic services inflation in particular looks to have run at its fastest quarterly pace in well over a year, which is the kind of homegrown price pressure the Bank cares about most. With oil and commodity prices falling sharply through June after the conflict eased, there is a reasonable chance inflation pressure eases further from here, but the path is unlikely to be a straight line.
The fuel excise reset is a small but real cash flow factor
The temporary fuel excise relief has been extended to 2 August, but at a reduced rate of 16 cents per litre, down from 32 cents. Pump prices have come well off their conflict driven peak, and the phased return towards the normal excise is designed to smooth the transition rather than deliver a sudden jump at the bowser.
For businesses with vehicle fleets, heavy logistics costs or thin transport margins, this is worth building into the next few months of cash flow forecasting. The relief is real but shrinking, and it disappears on a known date. If fuel is a meaningful line in your budget, now is a sensible time to revisit your assumptions rather than be caught out in August.
A clear warning shot for the private credit sector
One of the more significant developments for the borrowing market was the regulator turning its attention to private credit. Ahead of 30 June, ASIC urged funds, trustees and auditors to make sure their asset valuations are current, accurate and grounded in realistic assumptions, warning that the sector is facing its first real test.
The context matters. Private credit has grown quickly as an alternative to traditional bank lending, and for many businesses it has been a valuable source of funding when the banks could not or would not help. But tighter liquidity, emerging borrower stress and a slow creep in credit deterioration are now testing valuations and governance across the sector. A voluntary survey running from 26 March to 14 May 2026 captured responses from 22 managers covering 52 funds and around $76 billion in assets (ASIC, 2026), and the early findings point to uneven credit deterioration, pockets of higher defaults and loan amendments, and liquidity buffers that are tightening even where redemptions remain contained in aggregate.
We do not raise this to alarm anyone. Used well, private credit and non-bank lending remain an important part of the funding landscape, and for many small and medium businesses they fill gaps the major banks leave open. The point is simply that conditions are tightening, and the quality of your lender matters more in this environment than it did during the easy growth years. If you are relying on a non-bank facility, it is worth understanding how your lender is funded, how it values its book, and how it would behave if its own funding came under pressure. These are exactly the questions we help clients work through.
Offshore, the tone has turned more hawkish
It is also worth keeping half an eye on the United States, because what happens there shapes global funding costs. The US Federal Reserve has taken a more hawkish posture under its new chair, holding rates steady in a range of 3.50% to 3.75% but signalling a clear willingness to lift them if inflation proves sticky. Half of the board now expects a hike by year end, a notable shift from a position of no expected increases only a few months earlier.
For Australian borrowers, the relevance is indirect but real. A firmer global rate environment tends to keep upward pressure on funding costs here, particularly for lenders that raise money in offshore markets. It reinforces the case for not assuming cheaper money is just around the corner.
The labour market remains the missing piece
Finally, the jobs picture is the data point we are watching most closely. Employment has stayed resilient, and the unemployment rate looks to have settled somewhere in the low to mid 4s, with signs it may have eased back to between 4.3% and 4.4% in May. For inflation to fall sustainably, the labour market needs to loosen, and until job vacancies soften meaningfully it is hard to see the Reserve Bank gaining the confidence it needs to cut. A strong labour market is good news for revenue and demand, but it is also part of why rates are likely to stay higher for longer.
What this means for your decisions
Pulling it together, the environment is one of cautious stability rather than clear improvement. Rates are on hold but with a genuine risk of one more rise, inflation is cooling but not beaten, and credit conditions are quietly tightening even where headline lending markets look calm.
For most business owners and finance leaders, that points to a few sensible moves. Stress test your debt against a cash rate that is flat to slightly higher, not lower. Review the structure of your facilities now, while you have time, rather than when a renewal or a covenant forces the issue. If you have expansion or asset finance plans, weigh the cost of waiting against the cost of moving, because holding out for materially cheaper finance may prove a long bet. And if working capital is tight, build the shrinking fuel excise relief and any lumpy cost pressures into your forecasts before they land.
None of this is about reacting to every headline. It is about making deliberate decisions with a clear view of where the wind is blowing. If you would like to talk through how these shifts affect your particular debt structure, refinancing options or growth plans, we are always happy to have that conversation. A short chat now can save a lot of scrambling later, and there is no obligation in simply exploring your options.
This article is general information only and does not take into account your objectives, financial situation or needs. It is not personal financial, tax or credit advice. Please seek advice tailored to your circumstances before acting.
