RBA Holds Rates Steady, Citing Subdued Growth and Softer Inflation

The Reserve Bank of Australia (RBA) left interest rates unchanged at 4.35% in its August meeting, as expected by markets.

Governor Michele Bullock stated that a period of subdued growth is required to bring inflation down substantially, and that the RBA will increase the cash rate further if upside risks materialise.

The decision was based on softer-than-expected second-quarter inflation data, which showed headline inflation at 3.8% and trimmed mean measure at 3.6%, both well above the 2-3% target band.

Markets now price a lower chance of another hike this year than before the meeting, but the governor's remarks kept the risk alive into the November gathering when fresh forecasts will be available.