The Reserve Bank of Australia kept rates steady but warned of upside inflation risks, with a rate hike discussed at today’s meeting.
The Reserve Bank of Australia maintained its cash rate at 4.35%, aligning with market expectations but delivering a hawkish tone. Governor Michele Bullock emphasized upside risks to inflation and confirmed a rate hike was debated during the meeting.
Prior to the decision, markets had priced in a low probability of a hike, with inflation data showing signs of moderation. The RBA’s description of policy as ‘somewhat restrictive’ suggested a potential pause in tightening, though Bullock’s remarks countered this view.
Short-dated Australian bond yields reversed higher following the announcement. Analysts do not anticipate further rate hikes this year but forecast AUD/USD rising toward 0.73 by year-end.