RBA Holds Rates Steady but Warns of Possible Hike

The Reserve Bank of Australia (RBA) held its cash rate steady at 4.35% for the second straight meeting on August 11, but warned it might hike again if needed to control inflation.

The RBA said the economy was slowing as expected, and that growth in aggregate demand needs to remain subdued to reduce capacity pressures and bring inflation back to target.

The bank has already raised rates by 75 basis points this year to fully reverse the amount of policy easing from 2020, as it struggled to contain stubborn inflationary pressures in the economy driven by surging energy costs.

The RBA judged the current cash rate to be slightly restrictive, but has yet to rule out further policy tightening. Governor Michele Bullock said last month that a further slowdown in the economy may be required to bring inflation down.