RBA Maintains Cash Rate, Citing Ongoing Inflation Concerns

The Reserve Bank of Australia (RBA) has announced that it will maintain its cash rate at 4.35% for now, as it continues to monitor inflation risks. The decision was widely expected by economists and financial markets, with the RBA judging monetary policy remains restrictive and the economy is slowing broadly as anticipated.

The RBA's Monetary Policy Board unanimously voted to leave the cash rate unchanged at its August meeting, extending a pause that began in June following three rate hikes earlier this year. Despite signs of economic slowdown and lower inflation expectations, the Board made clear it remains concerned about upside risks to inflation and would be prepared to lift rates again if those risks materialise.

Inflation remains a key concern for the RBA, with underlying inflation forecast to fall to 3.3% by the end of 2026, down from 3.5% in the Bank's May forecasts. Governor Michele Bullock confirmed that a rate hike and a hold were both considered at the August meeting, highlighting the Board's focus on inflation risks.