A repeat of the Reserve Bank board’s split decision to raise interest rates in March could be on the cards as the central bank frets over the dual threats of high inflation and a stalling economy.

Financial markets and most economists are tipping a third straight rate hike on Tuesday.

ANZ Bank head of Australian economics Adam Boyton is part of the chorus predicting the Reserve Bank will lift the official cash rate to 4.35 per cent – the same level as its post-COVID-19 pandemic peak.

But he thinks it won’t be a lay down misere, with several members likely to vote in favour of keeping rates on hold.

The combination of a tight labour market, above-target underlying inflation and concerns inflation expectations could become unanchored all point in favour of a hike.

At the same time, the US-Israeli war with Iran’s effects on the economy could convince some board members more time is needed to weigh the impact on economic growth.

In March, four of the board’s nine members voted unsuccessfully to keep rates on hold, arguing there was too much uncertainty around the domestic growth outlook and how the conflict in the Middle East would evolve.

Uncertainty around the path forward would be reflected in the bank’s post-meeting communications, Mr Boyton said, with no forward guidance expected.

“We expect, however, a tilt in the language in the post-meeting statement that will open the door to an extended pause,” he said.

Financial markets put the chance of a hike on Tuesday at about three-quarters and have fully priced in at least one more rate rise by November.

Westpac forecasts another two hikes after May, in June and August.

But economists at ANZ, NAB, Commonwealth Bank, Deutsche Bank and HSBC think the Reserve Bank will stand pat after Tuesday.

“Whether the RBA delivers further tightening beyond May will depend on how quickly the economy weakens,” HSBC’s local chief economist Paul Bloxham said.

“We see a recent sharp weakening in sentiment as a clear signal that a downturn is already under way.

“Our central case is that, beyond the May hike, the RBA remains on hold.”

Updated economic forecasts by Reserve Bank staff, released simultaneously to the monetary policy decision, will be closely scrutinised for hints about the path forward for rates.

Earlier on Tuesday, the Australian Bureau of Statistics will release household spending figures for March.

Economists predict a rise of 1.5 per cent, driven by higher fuel spending.

Building approvals figures for March will be published on Monday.

Trend dwelling approvals have been gradually rising since early 2024 to just over 210,000 per year.

But the slow progress the industry has been making in recent years could be scuppered by surging building material prices as a result of the Iran war, the National Housing Supply and Affordability Council has warned.

On Wall Street, the S&P 500 and the Nasdaq advanced to record closing highs on Friday, boosted by ‌robust earnings and a dip in crude prices

The S&P 500 gained 20.46 points, or 0.28 per cent, to end at 7,229.47 points, while the Nasdaq Composite gained 217.67 points, or 0.87 per cent, to 25,109.98.

The Dow Jones Industrial Average fell 155.67 points, or 0.31 per cent, to 49,496.47.

Australia’s share market broke its worst losing streak since 2018 as oil prices eased from four-year highs and strong US earnings boosted investor sentiment.

The S&P/ASX200 gained 64 points on Friday, up 0.74 per cent, to 8,729.8, while the broader All Ordinaries improved by 67 points, or 0.75 per cent, to 8,954.6.

In the heart of Emilia‑Romagna, northern Italy, vast climate‑controlled warehouses hide one of the country’s most valuable assets. Towering shelves hold hundreds of thousands of wheels of Parmigiano Reggiano aging slowly, quietly and becoming more valuable with every passing month.

To outsiders, it looks like a cathedral of cheese. To Italy’s dairy producers, it is a lifeline.

Parmigiano Reggiano is one of the world’s most tightly regulated foods. It can only be produced in a small, designated area using three ingredients — milk, salt and rennet — and it must age for at least 12 months before it can be sold. Many wheels mature for 24, 36, or even 40 months.

That long wait creates a financial bottleneck. Farmers must be paid every 30 days. Staff, feed and energy costs accumulate daily. But revenue doesn’t arrive for a year or more. For more than a century, Credem Bank has stepped in to bridge that gap — accepting cheese as collateral.

Giancarlo Ravanetti, the boss of the bank’s cheese warehouse business, explains: “In Italy about 4 million wheels of Parmigiano Reggiano are made, and we keep 500,000… and allow customers to use the wheels as collateral to obtain financing.” The warehouse handles “about 2,300,000 wheels a year,” he adds. Inside these vaults, the value is staggering: “About 325 million euros ($382 million) worth of Parmigiano Reggiano.”

When a wheel of Parmigiano Reggiano arrives at the warehouse, it enters a tightly controlled system perfected over generations. Each wheel is scanned and logged into a digital system, a kind of passport that records its production date, dairy of origin and current status. Only then can it officially enter the vault.

The wheels are placed on long wooden shelves. Temperature, humidity and airflow are carefully controlled. Warehouse staff walk the aisles daily, checking wheels for cracks, swelling or moisture issues. Any irregularity is flagged.

At 12 months, the Parmigiano Reggiano Consortium performs the traditional tapping test — striking each wheel with a hammer and listening for internal defects. Only wheels that produce a clean, uniform sound earn the fire‑branded seal. The warehouse handles millions of wheels a year, moving them in and out for dairies, processors, exporters and companies that buy wheels for grating or long aging.

Once wheels are registered and aging, they can be pledged as collateral. The warehouse becomes a secure vault guaranteeing the bank that the wheels exist, are in good condition and match the pledge register. Ravanetti notes that this system has operated for more than a century and the bank has never lost a single euro on these loans.

The Consortium oversees the entire ecosystem, which unites roughly 300 producers and more than 2,000 dairy farmers. Spokesperson Fabrizio Raimondi describes it as an organization representing “approximately 50,000 people” and a sector with “a turnover over 4 billion.” Its expert team enforces strict production rules, promotes the brand globally, fights counterfeits and certifies every wheel. “These sealers can assure the consumer that this is the real one and the quality is good,” Raimondi says.

The Parmigiano Reggiano supply chain is built on cooperatives, a structure that Paolo Ganzerli of Granterre says is both a strength and a vulnerability.
Granterre, one of Italy’s largest dairy groups, is technically a stock company but owned by cooperatives of milk and cheese producers. This means the company must support hundreds of small farmers who rely on stable milk payments to survive.

Ganzerli explains that dairies must pay farmers immediately, even though the cheese they produce won’t generate revenue for at least a year. “Without this system of leverage, the world of Parmigiano Reggiano cannot exist,” he says.

Ganzerli describes a production system that is both artisanal and extremely expensive. Parmigiano Reggiano can only be made in a small geographic area, and the cows must be fed with locally produced forage. Different microclimates from mountain pastures to valley farms influence the milk’s characteristics. But the cost of producing that milk has soared in recent years, driven by inflation and global instability.

As Ganzerli puts it, “The cost to produce the feeding for the cows, the cost for everything, increased a lot… energy, transport, logistics — everything is more expensive now.” Even large companies like Granterre feel the strain, he says, because every increase in energy or feed prices ripples through the entire supply chain.

In 2025, the Protected Designation of Origin crossed a historic threshold: exports exceeded half of total sales for the first time, reaching 50.5% of all Parmigiano Reggiano sold worldwide.

International demand grew +2.7%, even as the domestic Italian market contracted sharply. France fell slightly (–0.3%, 14,800 t.), Germany remained stable (+0.1%, 10,400 t.), Spain grew (+2.5%, 1,850 t.), Sweden surged (+8.8%, 2,500 t.), and the United Kingdom rose strongly (+7.8%, 8,400 t.). Outside Europe, the United States grew +2.3% (16,800 t.), Canada +8.3% (3,900 t.), with Japan and the Middle East showing smaller but rising demand.

The United States is the largest foreign market for Parmigiano Reggiano — but also the most volatile. In late 2025, new duties raised the total tariff burden to 25%, with the possibility of further increases. Combined with rising shipping costs, inflation, and geopolitical tensions, the U.S. market has become increasingly unpredictable.

Raimondi notes: “There is regulatory uncertainty, and many operators are waiting before placing new orders.” The beginning of 2026 confirmed this trend as US importers paused purchases to assess the impact of tariffs and economic pressures.

Italy, meanwhile, saw a 10% drop in volumes sold in 2025. Higher consumer prices led Italians to buy Parmigiano Reggiano less frequently and in smaller portions, though the number of households purchasing it remained stable. Prices rose sharply: 12‑month wheels reached €13.22/kg (+20.6%), 24‑month wheels €15.59/kg (+24.8%). Production climbed to 4.19 million wheels (+2.7%).

Ganzerli notes that Parmigiano Reggiano is naturally lactose‑free, high in protein and free of additives — qualities that have helped it gain traction as a “superfood.” But he also warns that if prices rise too high, consumers may shift to cheaper cheeses like Grana Padano.

Producers typically receive 60–80% of a wheel’s value upfront when they use cheese as collateral. Blockchain technology now allows wheels to be pledged even while stored in producers’ own facilities, doubling Credem’s lending capacity. The Consortium is also investing in tourism, aiming to grow dedicated Parmigiano‑focused visits from 85,000 to 300,000 by 2029.

Parmigiano Reggiano is a €4 billion ($4.7 billion) industry sustained by some 300 certified dairies. Its survival depends on a delicate balance of tradition, regulation, and financial innovation.

Inside the cheese bank’s vast aisles, the wheels sit quietly, slowly transforming into one of Italy’s most prized exports. Each one represents months of labor, generations of expertise, and a financial system built on patience.