RBA Keeps Interest Rate Steady Amid Elevated Inflation

The Reserve Bank of Australia (RBA) has decided to maintain its interest rate at 4.35% for a second consecutive meeting, despite inflation being above its target range.

This decision was widely expected by economists and money markets, but RBA Governor Michele Bullock left the door open to future rate hikes.

While oil prices have surged due to the Middle East conflict, softer-than-expected inflation figures in late July reduced expectations of an August rate hike.

The RBA's preferred quarterly trimmed mean measure of inflation came in at 3.6%, below its previous forecast of 3.8% and giving the board more breathing room to assess developments in the Strait of Hormuz.

Economic forecasts released by the bank indicate that it still expects inflation to remain above 2.5% until early 2028, while the rapidly deteriorating housing market could weigh on household consumption and economic growth.