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At its latest meeting, the Reserve Bank of Australia (RBA) kept the cash rate on hold at 4.35 per cent.
Read today’s official statement on the RBA’s website. The board meets next on August 5-6.
Inflation is continuing to ease, but is falling more gradually than previously expected, according to the RBA.
“The central forecasts, based on the assumption that the cash rate follows market expectations, are for inflation to return to the target range of 2–3 per cent in the second half of 2025, and to the midpoint in 2026,” the RBA said in a recent statement.
“In the near term, inflation is forecast to be higher because of the recent rise in domestic petrol prices, and higher than expected services price inflation, which is now forecast to decline more slowly over the rest of the year.
“Inflation is, however, expected to decline over 2025 and 2026.”
The Canadian and European central banks recently cut the cash rate, but many economists still believe Australia is months away from following suit.
RBA deputy governor Andrew Hauser said Australia’s central bank wouldn’t be swayed by rate cuts in Canada and Europe.
RBA governor Michele Bullock also reminded Australians that an interest rate cut wouldn’t bring any relief unless inflation was under control.
"If it looks like we were going to meet our target, then we will remove the restrictive nature of monetary policy. That's what we will do," she said.
"But what I want to emphasise to people is that the precondition for that is that inflation needs to be coming back down and be sustainably back in the band on the board's timetable, because if it's not, we can't remove the restrictiveness of monetary policy.
"It won't be good for people now because inflation will be hurting everyone.”
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Get in touch today and we’ll assess whether it might be worthwhile refinancing to a more competitive interest rate.
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