RBA Leaves Cash Rate at 3.85pc in Shock Decision
The number: The Reserve Bank of Australia has stunned the market and economists by holding fire on a much anticipated rate cut and leaving the official cash rate on hold at 3.85 per cent.
The S&P/ASX 200 Index down 18.8 points, or 0.22 per cent, to 8570.5 by 3pm AEST.
Why it matters: The RBA reduced the cash rate in February and May after the pace of inflation slowed sufficiently to warrant borrowing costs. After pausing in April, global uncertainty caused by US tariff raised concerns about the global outlook and prompted the central bank to even consider a jumbo 50 basis point move.
What has changed: Domestic inflation finally returned to the RBA’s 2 per cent to 3 per cent target band in the first quarter, but the job markets, a key driver of inflation, remains tight. The US Federal Reserve left the policy on hold after its most recent meeting.
What’s next: RBA governor Michele Bullock will hold a media conference at 3.30pm which is expected to provide more insights into the board’s decision-making.
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