RBA Set to Make Latest Interest Rates Decision Amid Inflation Concerns

The Reserve Bank of Australia (RBA) is set to make its latest interest rates decision on Tuesday, with millions of borrowers watching closely. The RBA has already lifted rates three times this year, and Governor Michele Bullock has refused to rule out further hikes as inflation remains above its 2-3% target band.

The board will examine three key economic indicators: inflationary pressures, unemployment, and household spending. Inflationary pressures are a concern, with the consumer price index (CPI) and trimmed mean inflation both cited in the RBA's statements on its decision-making. The most recent data from the Australian Bureau of Statistics (ABS) showed a shift in inflation in June, with headline inflation falling from 4% to 3.8%, while the trimmed mean remained steady at 3.6%.

Sally Tindall, the data insights director at Canstar, said that inflation predictions have shifted over time primarily due to the war in the Middle East, which has added to inflationary pressures. The RBA aims to bring inflation down to between 2 and 3%, fulfilling one of its mandates to keep it low and stable.

The unemployment rate is also a critical data set for the RBA, with Tindall describing it as 'a critical data set for the RBA'. In June, the unemployment rate was 4.4%, slightly below the 2026 peak of 4.5% in April. However, Bullock said earlier this month that these figures were higher than expected.

Tindall warned borrowers to be prepared for another rate rise, saying 'if you've got a mortgage, don't bank on it'. She advised borrowers to review their finances and consider refinancing or negotiating a better deal with their bank. The big four banks predict the RBA won't move on rates until next year, but this could change if overseas conflict escalates and puts pressure on essential products like oil.