RBA Holds Steady at 4.35%, Warns of Possible Hike If Inflation Rebounds

The Reserve Bank of Australia (RBA) held its cash rate steady at 4.35% for the second consecutive meeting, signaling a cautious approach to monetary policy in an uncertain economic environment.

In a statement, policymakers emphasized their focus on ensuring that high inflation does not become embedded, and to achieve this, growth in aggregate demand needs to remain subdued to reduce capacity pressures and bring inflation back to target.

The RBA has already raised rates by 75 basis points this year to fully reverse the amount of policy easing from 2025 as it struggled to contain stubborn inflationary pressures in the economy driven by surging energy costs.

Despite the steady cash rate decision, Governor Michele Bullock warned that a further slowdown in the economy may be required to bring inflation down, echoing her comments last month.