Inflation remains high, although there are signs that inflationary pressures are moderating following three consecutive increases to the cash rate target since December 2025. Global energy supply continues to be impacted by the conflict in the Middle East, with resolution remaining uncertain. The selection of a reasonable discount rate therefore remains a key consideration, whether for the purpose of financial reporting or for any valuation analysis.

Markets have been volatile over the last few months as conflict in the Middle East has led to substantial increases in oil prices and higher inflation expectations, at least in the near-term. With government bond yields at their highest levels since 2011 and market conditions continuing to evolve, we have provided an early warning on our assessment of the equity market risk premium (EMRP) as at 31 May 2026 for Australia.

In the current environment, it is not just a compliance exercise. It is a judgement call that can materially influence reported results. At the centre of that judgement is the discount rate, often one of the most sensitive and closely scrutinised inputs in any impairment model. Get it wrong and the consequences are real. Asset values can be distorted, audit challenges can emerge, and confidence in reported outcomes can be undermined.

The conflict in the Middle East has triggered a global oil price surge, with higher energy and shipping costs reflecting a supply shock that has pushed headline inflation forecasts higher than anticipated. With market conditions continuing to evolve rapidly, we have provided an update on our assessment of discount rates as at 31 March 2026.

Optimism around the easing of inflation and potential interest rate cuts led to a rally in equity markets towards the end of June 2024. With markets continuing to fluctuate significantly, the selection of a reasonable discount rate remains a key consideration, whether for the purpose of financial reporting or for any valuation analysis.

Markets have experienced broadly positive performance over the last quarter, supported by rate cuts from central banks across major economies. This has been boosted by the extension of the US-China trade truce; however, uncertainty surrounding global trade policy remains a concern. With market conditions continuing to evolve rapidly, we have provided an update on our assessment of discount rates as at 30 September 2025.

Optimism around the easing of inflation and potential interest rate cuts led to a rally in equity markets towards the end of June 2024. With markets continuing to fluctuate significantly, the selection of a reasonable discount rate remains a key consideration, whether for the purpose of financial reporting or for any valuation analysis.