RBA Holds Cash Rate at 4.35% While Signalling Possible Future Hikes

The Reserve Bank of Australia’s nine-member monetary-policy board voted unanimously to keep the official cash rate unchanged at 4.35 per cent during its August meeting. The decision followed three rate increases earlier in the year and was widely expected by economists and financial markets. Governor Michele Bullock emphasized that the board and warned that “inflation remains too high, and the board remains concerned about the upside risks.”

Reserve Bank holds interest rates at 4.35 per cent as Australian borrowers await next RBA move

Australia’s inflation trajectory has improved since the May forecasts, with headline inflation easing to 3.8 per cent and the trimmed-mean measure falling to 3.6 per cent in the June quarter. Nevertheless, the RBA still projects inflation staying above the 2.5 per cent midpoint of its 2–3 per cent target range until early 2028. The central bank’s latest forecasts also show a modest rise in unemployment—4.7 per cent by the end of 2027 in one projection and 4.8 per cent by mid-2028 in another—while anticipating stronger job creation overall.

Reserve Bank holds interest rates at 4.35 per cent as Australian borrowers await next RBA move

• Cash rate: 4.35 per cent (held steady)

No surprises as RBA holds interest rates steady

• Headline inflation (June): 3.8 per cent, down from 4 per cent in May

Reserve Bank holds interest rates at 4.35 per cent as Australian borrowers await next RBA move

• Trimmed-mean inflation (June): 3.6 per cent, below the prior forecast of 3.8 per cent

ABC News Australia

• Unemployment forecast: 4.7 per cent by end-2027 (Guardian) vs. 4.8 per cent by mid-2028

Reserve Bank holds interest rates at 4.35 per cent as Australian borrowers await next RBA move

• Housing market: Prices falling in several capital cities; new home-loan commitments down roughly 25 per cent from the start of the year; mortgage borrowers now hold about a year’s worth of repayments in offset or redraw accounts.

ABC News Australia

Governor Bullock told reporters that the board considered only a hold or a further hike; a rate cut was not discussed.

Nine.com.au

The RBA’s monetary-policy statement highlighted several upside risks: continued pressure from the Middle-East conflict on oil prices, capacity constraints in construction, and a data-centre construction boom that could divert skilled labour from housing projects. The board also warned that a deeper-than-expected housing downturn could further dampen household spending.

The Guardian

• “Inflation remains too high, and the board remains concerned about the upside risks,” — Michele Bullock, reserve bank governor

The Guardian

• “The housing market wasn’t a constraint,” — Michele Bullock, reserve bank governor

The Guardian

• “Those forecasts are uncertain, and we are conscious we may need to tighten further,” — Michele Bullock, reserve bank governor

Nine.com.au

• “The board will raise interest rates further if that is what’s required to bring inflation down in a timely way,” — Ms Bullock, reserve bank governor

Reserve Bank holds interest rates at 4.35 per cent as Australian borrowers await next RBA move

The unemployment outlook varies between sources: the Guardian cites a forecast of 4.7 per cent by the end of 2027, while Thenightly reports a projection of 4.8 per cent by mid-2028. Both figures stem from the RBA’s updated forecasts but differ in timing, leaving uncertainty about the exact path of labour-market slack.

ABC News Australia

The RBA will reconvene in September, where it will assess fresh inflation and employment data, including the impact of ongoing Middle-East oil price volatility. Market participants will watch for any shift in the board’s language that could alter the implied probability of a rate increase before the year’s end.

No surprises as RBA holds interest rates steady