RBA Holds Cash Rate Steady Amid Inflation Concerns

The Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.35% for a second consecutive meeting, a unanimous decision that matched both Commonwealth Bank of Australia's own forecast and broader market expectations.

The RBA reiterated its commitment to bringing inflation back to target, explicitly stating it will do what is necessary, including further increases to the cash rate, if upside risks materialise. Governor Michele Bullock confirmed that both a rate hike and a hold were actively discussed at this meeting, with a focus on addressing inflation still running too high and upside risk tied to the ongoing Middle East conflict.

The updated Statement on Monetary Policy showed a lower starting point for inflation than previously forecast, with trimmed mean inflation printing at 3.6% over the year to the June quarter, below the RBA's earlier 3.8% forecast. Growth forecasts were revised modestly higher through the forecast period, helped by stronger assumed population growth and a substantial upgrade to business investment.