The Reserve Bank of Australia decided to leave the cash rate target unchanged at 4.35%, saying that while the economy appears to be slowing as expected after three rate lifts since the beginning of 2026, inflation remains too high and is not expected to return to around the midpoint of the target range until late 2027, according to a Tuesday statement by the central bank.
The central bank said the board decided to leave the cash rate unchanged while it assesses how the economy is evolving, but will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate further if upside risks materialize.
The RBA said disruption to global oil supply is adding directly to inflation, with higher fuel prices being passed through to the prices of other goods and services. This means inflation is likely to remain high for some time, in addition to the effect of capacity pressures in the economy.
The RBA said resolution of the Middle East conflict remains uncertain, and global oil supply is expected to take time to recover, maintaining upward pressure on energy prices and inflation, while a period of prolonged uncertainty may also weigh on growth overseas and in Australia.
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