Reserve Bank of Australia Poised for Hawkish Hold on Cash Rate at 4.35%
| Pair | Now | Since publish |
|---|---|---|
| AUDUSD | — | — |
| EURAUD | — | — |
| AUDJPY | — | — |
- RBA holds OCR at 4.35% unanimously.
- Hawkish RBA signals potential fourth hike amid upside risks.
- Inflation target late 2027; markets price September hike.
- AUD trades 0.7050 vs USD on energy risk fears.
The Reserve Bank of Australia (RBA) is broadly expected to keep its official cash rate unchanged at 4.35% for the second consecutive meeting on Tuesday. Despite recent economic indicators showing a rise in the unemployment rate to 4.4% and a lower-than-forecast Q2 Trimmed-Mean CPI Y/Y of 3.6%, the central bank is anticipated to reiterate its readiness to tighten policy further if inflation pressures persist. Market participants will closely scrutinize the accompanying Statement on Monetary Policy (SMP) for updated macroeconomic forecasts, which are projected to show lower inflation and a higher unemployment rate, as well as for any potential dovish surprises in the RBA’s forward guidance.
The Reserve Bank of Australia (RBA) is widely expected to keep the Official Cash Rate (OCR) steady at 4.35% for the second consecutive meeting. Market attention will focus on the accompanying Monetary Policy Statement, updated economic forecasts, and Governor Michele Bullock’s press conference for signals on future policy moves. The rate decision is due at 04:30 GMT, followed by Governor Bullock’s press conference at 05:30 GMT. A potential hawkish signal could emerge if any of the seven non-RBA Board members dissent in favour of tightening. Forecast revisions are also anticipated. While a meaningful minority of economists still expect further hikes, some major banks are pencilling in cuts for mid-2027. The Australian Dollar (AUD) is expected to experience volatility around these announcements.
The Reserve Bank of Australia (RBA) has kept the Official Cash Rate (OCR) steady at 4.35%, as widely expected. The policy board, led by Governor Michele Bullock, unanimously decided to hold the rate, indicating no dissent among members. The RBA stated that it expects higher unemployment and a weakening property market to sufficiently weigh on economic activity to cool inflation. The board also observed that inflation is not anticipated to return to the midpoint of its target range until late 2027, with upside risks to this projection. Prior to the decision, traders were pricing in approximately 97% odds of no change today and 82% odds of no change in September.
The Reserve Bank of Australia (RBA) explicitly stated it “kept the door open for a fourth interest rate hike this year,” reinforcing its hawkish stance by signaling a rate hike if upside risks to inflation materialize. This decision followed widespread market anticipation of a hold, partly attributed to inflation slowing more than expected on lower fuel prices. The RBA also noted it “still need[s] to see progress before being confident on CPI.” Following the announcement, the Australian Dollar (AUD) initially attracted bids but was later trading marginally lower at around 0.7050 against the US Dollar (USD) during the European trading session.
Major economic forecasters are now split on the Reserve Bank of Australia’s (RBA) next policy move. MUFG specifically highlights severe external risks, pointing to spiking Brent crude prices driven by US pressure on Iran and the potential closure of the Strait of Hormuz, which could trigger a global inflation shock. MUFG warns that persistent energy costs could force the RBA to implement a rate hike as soon as September. Following these developments, markets have begun pricing in a full RBA rate hike by next March.