RBA Holds Rates Steady, Leaves Door Open for Further Hikes

The Reserve Bank of Australia (RBA) has decided to hold interest rates steady at 4.35% for the second consecutive meeting, leaving the door open for further hikes if inflation remains high.

Despite falling house prices and lower-than-expected inflation, which was released in late July, the RBA's governor Michele Bullock warned that both headline and underlying inflation remain above the bank's 2-3% target range.

The central bank's decision to hold rates steady was widely expected by economists and money markets. However, governor Bullock sought to quash expectations that the RBA's hiking cycle is over, stating that 'the message today is that, in waiting, the board isn't ruling out that there might be a need for further interest rate rises if we look like we're off a path, which takes us with inflation remaining above the target for much longer than in the forecasts.'

The RBA's decision to hold rates steady was seen as a 'hawkish pause' rather than a signal that the tightening cycle has ended. The ASX200 jumped 25 points before retreating to end the day up 18 points or 0.19%. The Aussie dollar dropped against the greenback as low as 70.40 US cents before climbing to 70.52 US cents after the press conference.