Goldman Sachs Research updates its RBA call.

"The positive Australian macro outlook for 2026 we presented before the war in Iran continues to be undermined by the surge in fuel prices, rising interest rates, and related cost-of-living pressures. In year-over-year terms, our end-2026 forecasts for GDP and inflation stand at 1.3% yoy (down from 2.2% yoy pre-war) and 3.9%yoy (up from 3.0%yoy pre-war) respectively. The global supply shock has knocked the RBA further off its strategy to walk a benign "narrow path" that "preserves gains in the labour market"," GS notes.

"The geopolitical and macro outlook remains highly uncertain, but we now expect the RBA to raise the policy rate 25bp in May and June to 4.60% (prior: May +25bp to 4.35%), pushing our subjective estimate of the odds of a recession over the next 12 months to 25%," GS adds.