RBA Downgrades Inflation Forecast Amid Middle East Tensions

Australia's central bank has downgraded its inflation forecast for the second time this year, but still sees risks to the upside due to tensions in the Middle East.

The Reserve Bank of Australia (RBA) expects cost pressures to ease a little quicker than previously thought as financial conditions remain tight.

However, it warned that inflation risks are still tilted to the upside, and policymakers are expected to hold interest rates steady at 4.35% for a second meeting.

The RBA made modest changes to its forecasts out to 2028, with economic growth a little more resilient and inflation a little cooler.

Economic growth is now expected to slow to a below-trend rate of 1.4% by the end of the year, while unemployment is seen stable around the current 4.4% before rising to 4.8%.