RBA Expected to Hold Cash Rate as Inflation Eases

The Reserve Bank of Australia (RBA) is expected to keep its cash rate at 4.35% on Tuesday, according to economists.

This decision comes after a sharper-than-expected moderation in inflation, with markets focused on how the central bank balances improving price pressures against signs of a cooling housing market.

Australia's second-quarter Consumer Price Index (CPI) surprised on the downside, with headline inflation easing to 3.9% year-on-year and trimmed-mean inflation falling to 3.6%, both below the RBA's previous forecasts.

Westpac expects the central bank to retain a 'hawkish' posture while assessing incoming data, saying the softer second-quarter inflation figures could give policymakers confidence that price pressures are easing under existing settings.