RBA Holds Interest Rate Steady Amid Inflation Concerns

The Reserve Bank of Australia (RBA) has maintained its cash rate at 4.35 percent, leaving it unchanged for a second consecutive meeting. Despite inflation remaining above the target range of 2-3 percent, the decision was widely expected by economists and money markets.

The RBA's preferred quarterly trimmed mean measure of inflation came in at 3.6 percent, which is below its previous forecast of 3.8 percent. However, this still leaves room for future rate hikes as inflation remains above the target range.

One consideration for the RBA is the rapidly deteriorating housing market, which could weigh on household consumption and economic growth. House prices have already started to decline since the RBA's three rate rises in the first half of 2026, adding around $270 a month in mortgage repayments for a $600,000 mortgage.

The RBA still expects inflation to remain above 2.5 percent until early 2028 and has noted that a deeper decline in housing prices than anticipated could further weigh on economic growth.