RBA Keeps Rates Steady, Leaves Door Open for Further Hikes

The Reserve Bank of Australia (RBA) has maintained its benchmark lending rate at 4.35% for the second consecutive meeting, leaving the door open to further interest rate hikes.

Although economists and money markets had widely expected a hold on rates, RBA Governor Michele Bullock emphasized that the bank is not ruling out additional increases if inflation remains above target.

In its statement accompanying the decision, the RBA noted that falling house prices and lower-than-expected inflation contributed to the decision to keep rates steady. However, Bullock cautioned that both headline and underlying inflation remain above the 2-3% target range, with forecasts indicating inflation will stay above 2.5% until early 2028.

The RBA's decision was seen as a 'hawkish pause' by EY Oceania Chief Economist Cherelle Murphy, who noted that it does not signal the end of the tightening cycle.