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RBA holds cash rate at 4.35% as inflation remains too high

The RBA said financial conditions have tightened after three cash rate increases this year, with money market rates, government bond yields rising and the exchange rate appreciating.

Reported · Written up by our desk · Central Banks

The Reserve Bank of Australia left the cash rate target unchanged at 4.35%, citing ongoing inflation concerns in its policy statement, according to Action Forex.

The RBA said inflation picked up materially in the second half of 2025 and that some of the increase reflected greater capacity pressures. It added that headline inflation remains too high, trimmed mean inflation is still elevated, and oil and most related commodity prices are higher than before the Middle East conflict.

The central bank noted that cost pressures are leading some firms to increase prices of goods and services. It said short term measures of inflation expectations have eased but remain higher than earlier in the year.

The RBA also pointed to tightening financial conditions following three cash rate target increases earlier this year, with money market interest rates and government bond yields rising and the exchange rate appreciating. It added that consumer spending growth is slowing gradually, housing momentum has shifted with housing prices falling in some capital cities and new housing loans declining, and uncertainties remain tied to the Middle East conflict and the path of global oil supply.

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