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RBA holds cash rate at 4.35% but flags risk of further hikes
The Reserve Bank of Australia kept its cash rate unchanged at 4.35% for a second straight meeting, citing weaker-than-expected Q2 inflation while Governor Michele Bullock maintained a hawkish tone and warned about Middle East-driven oil price inflation.
The Reserve Bank of Australia left its cash rate unchanged at 4.35% for a second straight meeting, saying the slowdown in activity is broadly in line with expectations, according to Action Forex.
The decision to stay on hold this month was also influenced by weaker-than-expected Australia Q2 inflation, even though some board members favored additional tightening. Governor Michele Bullock, however, kept a hawkish stance at the post-meeting press conference and said rates may need to rise again after three rate hikes since January 2026.
Bullock said the RBA’s policy focus remains bringing inflation back to target, noting that energy costs have continued to support inflation and weigh on the economy. The central bank also pointed to growing risk of escalation in the Middle East, which could keep oil prices elevated and feed into broader inflation pressures that may prompt future RBA rate hikes.