RBA Keeps Cash Rate Unchanged Amid Ongoing Inflation Concerns

The Reserve Bank of Australia (RBA) has decided to hold its official cash rate at 4.35 per cent, maintaining a hawkish stance despite softer inflation figures and a cooling labour market.

In a widely expected decision, the RBA board cited ongoing concerns about inflation, which is still above the target range of 2-3 per cent. The bank expects it to return to this midpoint by late 2027, but notes there are upside risks to this projection.

Economists had initially forecast another rate hike to take the cash rate to 4.6 per cent, but many have since revised their expectations following recent data releases. Some experts still predict further hikes may be needed if inflation continues to hover above target.

Grant Feng from Vanguard believes the RBA will refrain from further rate increases for the remainder of the year due to a combination of factors, including lower starting point inflation, a loosening labour market, slowing growth, and falling house prices. However, others like Katherine Palmer from BlackRock Australia anticipate one more rate increase later this year to address current inflation challenges.