RBA Keeps Cash Rate Steady Despite Inflation Concerns

The Reserve Bank of Australia (RBA) has decided to keep the cash rate at 4.35% for another month, giving home owners a temporary reprieve from further mortgage pain.

This decision was widely predicted by financial experts after last month's inflation figures came in lower than expected. The consumer price index (CPI) was 3.8% in June, above the RBA's target of between 2 and 3%, but significantly lower than had been predicted.

RBA governor Michele Bullock has reiterated that future hikes would remain on the table as long as inflation remains above target. She said that inflation is expected to remain above target until late 2027, but falling house prices and a softening labour market could indicate the three hikes to the cash rate in the first half of the year have been effective.

LJ Hooker head of research Mathew Tiller said the hold would provide some reassurance for those looking to buy, but would not be a quick-fix for affordability. He noted that borrowing capacity remains tight while sellers may feel more comfortable coming to the market, but will need to be realistic on price.