RBA Holds Rates at 4.35% Amid Ongoing Inflation Concerns

The Reserve Bank of Australia (RBA) has decided to hold the cash rate at 4.35 per cent, giving borrowers and businesses a temporary reprieve from further interest rate increases.

However, RBA Governor Michele Bullock emphasized that this decision does not mean interest rates are about to fall, and that inflation remains too high, making another rate rise possible if the inflation outlook deteriorates.

The RBA is balancing two competing risks: raising rates too aggressively could weaken households, businesses, employment, and the housing market, while leaving rates too low for too long could lead to entrenched inflation.

The bank's decision is based on its assessment that the recent rate increases are now working through the economy, with financial conditions tightening, consumer spending growth slowing, and housing momentum weakening.