RBA Leaves Rates Steady, Warns of Further Hikes Amid High Inflation

The Reserve Bank of Australia (RBA) has left interest rates unchanged at 4.35%, despite some signs of cooling inflation. The central bank warned that price pressures remain high and could lead to further rate hikes.

In a unanimous decision, the RBA acknowledged that Australian consumer price index inflation had eased in the second quarter, but still sees inflation as too high. The bank forecasts CPI inflation at 3.6% by end-2026, lower than earlier estimates of 4.0%. Underlying inflation is expected to be 3.3% by the same date.

The RBA also expressed concern over capacity constraints and domestic demand, which it sees as necessary to bring down inflation. The central bank stated that it will continue to raise rates if upside risks materialize, including increasing the cash rate target further.