RBA Expected to Hold Interest Rates Amid Surprise Inflation Drop

The Reserve Bank of Australia (RBA) is expected to keep interest rates on hold this week, according to economists.

This prediction comes after a surprise drop in inflation, which fell from 4% to 3.8% in June - the lowest levels since the Iran war began.

NAB senior economist Taylor Nugent said the RBA would likely follow market forecasts and keep rates at 4.35%, citing that 'the net of data flow since May has not given them a push' to tighten further.

Hsbc chief economist Paul Bloxham also expects the central bank to take a wait-and-see approach, but notes that inflation remains above target and there's still a chance rates could be lifted later this year if inflation doesn't fall fast enough.