RBA Keeps Rates Steady Amid Hawkish Stance on Inflation

The Reserve Bank of Australia (RBA) has left interest rates unchanged at 4.35% for the second consecutive meeting, maintaining a 'hawkish pause' stance that suggests further rate hikes may be on the horizon.

The decision was widely expected by economists and money markets, but RBA Governor Michele Bullock sought to quash expectations that the bank's hiking cycle is over.

Bullock emphasized that both headline and underlying inflation remain above the RBA's 2-3% target range, with new forecasts showing inflation is likely to remain above 2.5% until early 2028.

The central bank cited a range of factors contributing to upside risks to inflation, including the Middle East oil disruption, global AI investment boom, and El Nino-driven food price increases.