ANZ Predicts RBA to Hold Cash Rate at 4.35% Until 2027

ANZ, one of Australia's largest banks, believes the Reserve Bank of Australia (RBA) will keep its cash rate at 4.35% when it meets on August 11th.

This decision is expected to be a 'hold, but sound tough' move, according to ANZ, with policymakers warning that inflation remains too high and leaving the door open for another hike in the future.

The bigger picture here is the timeline: ANZ predicts interest rate cuts won't come until the second half of 2027, and even then, there will only be two quarter-point moves. This 'higher for longer' outlook matters because it influences market expectations and wholesale interest rates that banks use to fund themselves and hedge loans.

The RBA is also expected to flag ongoing pressure in construction costs and capacity, keep near-term growth forecasts steady, and assume unemployment will rise later on. This sets the stage for a debate about how long interest rates will stay restrictive before easing begins.