UOB forecasts the RBA will hold rates steady due to cooling inflation and labor market softening, despite elevated core inflation.
The Reserve Bank of Australia is expected to maintain its cash rate at 4.35% through at least the first quarter of 2027. Softer headline inflation, a cooling labor market, and stagnant wages have reduced the urgency for further tightening, though core inflation remains elevated.
The RBA last adjusted rates with three hikes earlier this year, bringing policy to a restrictive stance. Analysts note the central bank’s tightening bias remains, but incoming data on second-quarter inflation, labor trends, and household demand will guide future moves.
Markets anticipate a wait-and-see approach as the RBA assesses economic conditions before considering additional hikes.