RBA Holds Fire on Interest Rates Amid Easing Inflation Pressures

The Reserve Bank of Australia (RBA) has maintained its cash rate at 4.35 per cent for the second consecutive time, following its latest monetary policy decision. This decision aligns with market expectations, as several economic commentators pointed out that the latest inflation print combined with other readings of slowing growth, a loosening jobs market, and a cooling housing market had come in well under the RBA's initial forecasts.

RBA Governor Michele Bullock stated that short-term measures of inflation expectations have eased but remain higher than earlier in the year. Bullock noted that 'inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures.'

The RBA's decision to hold interest rates steady suggests that the bank is taking a cautious approach in light of the current economic conditions. The statement from the RBA Board highlights the ongoing impact of the Middle East conflict on inflation, which has so far been less than expected.