RBA holds cash rate at 4.35%

The Reserve Bank of Australia (RBA) has opted to hold interest rates steady at 4.35%. This move reflects the RBA’s cautious approach, as it closely monitors key economic indicators such as inflation, unemployment, and consumer spending. Overseas, the Federal Open Market Committee (FOMC) has cut interest rates by a larger-than-expected 50 basis points (bps), bringing them to a range of 4.75–5%, and has signalled further cuts through 2026.

Economic commentators expected the RBA to hold rates for now, citing the need for more evidence of cooling inflation before any cuts are made. Some predict the first rate cut could occur on Melbourne Cup Day in November, given the RBA’s historical rate movements on that date. ANZ economists argue that the RBA’s decisions will not be directly influenced by the Fed, as Australia continues to grapple with high inflation. RBA Governor Michele Bullock has emphasised that tackling inflation remains the priority, even warning that entrenched inflation could increase recession risks and lead to further rate hikes.