April 2026 edition

Market Observations

The key market consideration this month was the RBA meeting, where expectations of a rate hike at the start of the month were at 0%, which quickly changed to 57% post the tension escalation in Iran and the the gulf states.

1. The RBA delivers a split decision rate hike to 4.10%

The Reserve Bank lifted the cash rate again in March, taking it to 4.10%, in what was a notably tight 5–4 board decision. While inflation had already been tracking above target, escalating geopolitical tensions accelerated the urgency to act. The message from the Board is clear:

Anchoring inflation expectations remains the priority, even as global uncertainty rises.

2. Markets are pricing further tightening, but the RBA may not follow

Global markets are increasingly focused on the inflationary impact of conflict rather than recession risk, with local pricing implying up to three additional rate hikes by the end of 2026 (toward ~4.85%). At present, domestic conditions and recent RBA communication do not fully support that trajectory. It is likely that there may be one further 25bp increase in May, followed by a pause around 4.35% as the Board assesses the evolving outlook.

This creates a difficult policy balance

• raising rates further risks slowing an already moderating economy
• holding rates risks allowing cost-driven inflation pressures to become embedded

For clients managing leverage, liquidity, or acquisition timing, this environment reinforces the importance of flexible structuring rather than relying on a single rate-path assumption.

3. Fuel Prices Surge and Expectations Matter

Fuel prices across Australia have risen sharply in recent weeks, with diesel up ~70% and petrol up ~50% since late February.

While attention has turned to potential retail price gouging, crude oil is only one component of local fuel pricing. Refining margins, shipping costs, insurance, and the Australian dollar all play a role. More importantly, fuel represents approximately 3.5% of CPI and is one of the most visible costs households track closely.

That visibility means sustained increases risk lifting inflation expectations (a key variable the RBA is watching closely) and may influence the future path of interest rates more than many realise.

Numbers at a glance

Across all major capital cities, terminal gate petrol prices moved from the mid-170c range to the mid-230c range per litre within just two weeks, representing a rapid and broad-based increase rather than a localised adjustment.

Moves of this speed tend to matter less for their direct CPI contribution and more for what they signal about short-term inflation momentum and household expectations. Fuel remains one of the few prices consumers observe weekly, which means sustained increases can quickly influence sentiment around the overall cost of living.

For advisers working with leveraged clients or those considering acquisitions, this environment reinforces several practical considerations:

• inflation expectations remain sensitive to energy inputs
• wholesale funding markets often respond before official cash rate changes
• fixed-rate pricing can adjust ahead of RBA decisions
• banks may become more cautious on credit settings if inflation proves persistent

While fuel itself is only a small component of CPI, its signalling effect can be disproportionate — particularly when combined with currency movements and shipping cost volatility.

For clients already driving electric vehicles, this has been a rare moment where charging at home is starting to feel like an inflation strategy!

At the time of writing, the Government has announced a halving of the national fuel excise for at least three months, resulting in a cut to the cost of fuel by around 26.3c a litre.

This cut, however, is funded by Government debt and it is expected to cost the federal budget $2.55b, according to Treasurer, Jim Chalmers. It does not lift supply, rather it cushions the blow temporarily with long-term fiscal consequences.

Case Study | Finance Showcase

SMSF lending becomes powerful when aligned with retirement strategy, not just servicing metrics.

Introduced by an existing client, this transaction involved the commercial purchase of an adjacent office via SMSF for a client who operates a successful, growing accounting practice.

While the practice was profitable, the clients deliberately maintained modest personal salaries and retained earnings within the business. Super contributions had also been inconsistent historically. With both clients in their late 60s and approaching retirement, servicing required a strategy that extended beyond traditional income metrics.

Our approach

We worked closely with the clients and their personal accountant to structure a solution aligned with their broader retirement objectives:

• Demonstrated capacity within the clients’ personal balance sheet to support additional super contributions.
• Structured servicing to incorporate future concessional and non-concessional contribution strategies.
• Secured accountant confirmation supporting the intention to increase contributions.
• Obtained lender approval for a 30-year commercial loan term, supported by the strength of assets held within the SMSF and the clients’ overall position.

Outcome

The clients successfully acquired the business premises within super, aligning their lending structure with their long-term retirement strategy rather than relying solely on taxable income.

This transaction is a strong example of how SMSF lending can support business owners transitioning toward retirement, particularly where wealth sits outside traditional servicing frameworks.

Rate Card

A practical reference point for client conversations.

Each edition of Perspectives includes a snapshot of current bank pricing, RBA positioning, and BBSW movements to support the discussions you’re having with clients in real time.

For many High-Net-Worth clients, lending decisions are rarely driven by headline rates alone. However, understanding where pricing is moving across the market can help frame conversations around timing, structure, liquidity strategy, and asset positioning.

In practice, we’re seeing advisers use this information to

• sense-check whether existing lending remains competitive
• support conversations around refinancing or restructuring opportunities
• frame expectations ahead of acquisition decisions
• interpret the direction of funding costs beyond media commentary
• provide context around fixed-rate strategy and floating-rate exposure

Importantly, shifts in BBSW and wholesale funding costs often influence pricing before changes appear in standard variable rates. Having visibility across these movements can help you stay ahead of the curve when advising clients

Team Insights

We continue to work closely with our partners across accounting, wealth, legal and family office networks who are supporting clients through increasingly complex structuring decisions. Our role is to complement existing relationships by providing lending strategy where balance sheets, entity structures, or income profiles sit outside standard frameworks, always with the objective of strengthening, not replacing, the adviser–client relationship.

Whether it’s workshopping a scenario early, providing a second structuring perspective, or supporting a live transaction, we’re always happy to collaborate where it adds value for your clients and your practice.

The best way we work with our partners is to workshop scenarios with us early, either over the phone, in person or over a video call. If there is a transaction that is achievable, we can then organise a joint discussion with the client to explore structure and next steps together, ensuring you remain central to the advice process throughout.

This month, the LPO team grew with the addition of Lachlan Wraith as Private Client Advisor.

Lachlan joins us with a strong lending background and was recently recognised as a Signature Broker at Lendi Group, an achievement awarded to the top 5% of brokers nationally. Beyond technical capability, he brings a collaborative approach, strong integrity, and a clear focus on client outcomes, qualities that closely align with how we support our partners and their clients.

We’re very pleased to have Lachlan join the team and look forward to the contribution he will make as Lydian Private Office continues to grow.