RBA Keeps Cash Rate at 4.35% Amid Lower Inflation and Economic Slowing

The Reserve Bank of Australia (RBA) has kept the cash rate at 4.35% for the second time this year, providing some relief to homeowners who were bracing for further mortgage pain.

The decision was widely predicted by financial experts, including those at major banks, following lower-than-expected inflation figures in June.

RBA Governor Michele Bullock reiterated that future hikes are still on the table if inflation remains above target. She noted that inflation is expected to remain above 2-3% until late 2027 but emphasized that a number of economic factors, including falling house prices and a softening labor market, could indicate the three interest rate hikes in the first half of the year have been effective.

Associate Professor Evgenia Dechter at the University of NSW said the easing in the economy presents an opportunity for the RBA to wait and see before committing to more changes to the cash rate. She noted that inflation is still too high, but the economy is showing signs of a slowdown, including weak GDP growth, upward trend in unemployment rates, and increasing underemployment.