RBA Holds Cash Rate at 4.35%, Warns of Further Hikes If Inflation Persists

Australia's central bank maintained its cash rate at 4.35% for the second consecutive meeting, saying the economy is slowing as expected but warning it might raise rates further if necessary to control inflation.

The Reserve Bank of Australia (RBA) made the decision during its August policy meeting, citing subdued growth in aggregate demand and a need to reduce capacity pressures to bring inflation back within its 2% to 3% target band.

Markets had anticipated a steady outcome given underwhelming second-quarter inflation data and a weakening housing market. The RBA has already increased the cash rate by 75 basis points this year, aiming to fully reverse policy easing from 2025 as it battles stubborn inflationary pressures driven by surging energy costs.