RBA Holds Official Cash Rate at 3.85% Amid Easing Inflation, Global Uncertainty Concerns

MT Newswires Live
08 Jul

The Reserve Bank of Australia (RBA) said it left the official cash rate unchanged at 3.85% on Tuesday, citing easing inflation and a strong labour market, while maintaining a cautious stance amid global uncertainty and awaiting more data to confirm inflation is on track to return to target sustainably.

In its monetary policy statement, the central bank noted that inflation continues to ease from its 2022 peak, with March quarter figures near the target range and underlying inflation expected to moderate further.

Trimmed mean inflation was 2.9%, with May's forecast expecting it to ease toward the 2% to 3% midpoint as the cash rate gradually eases.

The central bank highlighted persistent global uncertainty from unresolved US tariffs and trade policies weighing on activity, while domestic demand gradually recovers alongside rising incomes and easing financial stress.

Labor market conditions remain tight with wage pressures, but uncertainties persist around domestic demand growth, the impact of monetary easing, and business responses to weak productivity.

The board sees inflation risks as more balanced and the labor market as strong, but remains cautious amid uncertainty, choosing to await more data before confirming a sustainable 2.5% inflation target, while committing to closely monitor global and domestic risks to ensure price stability and full employment.

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