The Reserve Bank of Australia kept rates steady but warned inflation may delay cuts until late 2027, with risks tilting toward another hike.
The Reserve Bank of Australia left its cash rate unchanged at 4.35% in a unanimous decision, aligning with market expectations. Policymakers cited persistent inflation and capacity pressures, alongside rising fuel costs, as key concerns.
Inflation is projected to return to the midpoint of the RBA’s 2-3% target only by late 2027, later than previously anticipated. The central bank noted easing labor market conditions and tentative signs of slowing consumer spending but remained cautious about upside risks.
While the base case assumes no further hikes, the RBA did not rule out additional tightening in Q4 if demand remains strong or energy prices surge again. Governor Bullock emphasized uncertainty around forecasts, keeping policy options open.