RBA Holds Rates Steady Amid Inflation Concerns

The Reserve Bank of Australia (RBA) kept the cash rate at 4.35% in its latest decision, as widely expected by markets and analysts.

Standard Chartered's Nicholas Chia notes that while the RBA sees inflation returning to its target range only by late 2027, there is still a risk of another interest rate hike in Q4 if demand and energy prices remain problematic.

The RBA itself emphasized the need for caution due to high price pressures and capacity constraints, despite easing labour-market conditions and slowing consumer spending growth.

According to Chia, the base case remains no further hikes, but the risk is skewed towards a hike in Q4 if demand doesn't slow sufficiently or energy prices revisit recent highs.