The Reserve Bank of Australia kept rates steady but indicated another increase remains on the table amid inflation concerns.
The Reserve Bank of Australia left its benchmark interest rate unchanged this week, maintaining the cash rate at 4.35%. Markets initially viewed the decision as dovish, but Governor Michele Bullock later clarified that policymakers debated both holding and hiking rates, calling another increase “quite possible.”
The RBA’s statement emphasized that past tightening may still be sufficient to curb inflation, though analysts remain skeptical. Rabobank strategists expect one more rate hike later this year, citing persistent inflation risks. The central bank’s cautious stance contrasts with earlier market expectations of a more definitive pause.
The Australian dollar showed limited reaction, as traders weighed the mixed signals. Bond yields edged higher on the hawkish undertones, while equities remained largely unchanged.