Softer GDP, easing inflation, and a cooling labor market reduce pressure for further RBA tightening, analysts expect.
The Reserve Bank of Australia is expected to keep its cash rate at 4.35% through at least the first quarter of 2027, as weaker domestic demand and cooling economic indicators ease pressure for further hikes. Last month, the RBA raised rates by 25 bps to 4.35%, with an 8-1 vote, reversing last year’s easing measures to tackle persistent inflation.
Recent data shows softer GDP growth, easing inflation, and a cooling labor market, reducing the urgency for additional tightening despite still-elevated core inflation. Stagnant wages and weaker economic activity suggest restrictive monetary policy is filtering through to households and businesses.
UOB economists anticipate the RBA will maintain a tightening bias while assessing inflation dynamics and broader economic conditions ahead of its June 16 meeting.