RBA Keeps Cash Rate at 4.35%, Warns Future Hikes May Be Needed

The Reserve Bank of Australia (RBA) has decided to keep the cash rate at 4.35% for now, but is not ruling out future hikes if inflation remains high. This decision was widely predicted by financial experts and major banks after last month's inflation figures came in lower than expected.

In June, the consumer price index (CPI) was 3.8%, above the RBA's target of between 2% and 3%, but significantly lower than had been predicted. Reserve Bank governor Michele Bullock has reiterated that future hikes would remain on the table as long as inflation remained above target.

Bullock said, 'The board is determined to ensure that expectation of higher inflation do not become embedded in price and wage setting decisions.' The RBA predicts inflation will remain above target until late 2027, but a number of economic factors, including falling house prices and a softening labour market, could indicate the three hikes to the cash rate in the first half of the year had been effective.