The Reserve Bank of Australia (RBA) has kept interest rates on hold at 3.85 per cent.
It was widely tipped that the RBA would deliver an interest rate cut today in what would have been a win for mortgage holders.
But instead, the central bank has opted for caution.
“The Reserve Bank of Australia has kept the cash rate on hold today, likely influenced by President Trump’s decision to extend his 90-day pause on “Liberation Day” tariffs until August 1,” said Nerida Conisbee, Ray White Group Chief Economist.
“With inflation now at 2.1 per cent and trimmed mean at 2.4 per cent, the RBA appears comfortable that price pressures are under control, while the extended tariff pause provides additional breathing room for monetary policy decisions.
“The extension of Trump’s tariff pause until August 1st gives the RBA more time to assess global trade dynamics before making significant policy adjustments.”
The RBA Board voted six to three in favour of leaving rates on hold.
“The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong,” the Board said in a statement.
“Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply. The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis. It noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia.
“The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.”
Troy Dodds
Troy Dodds is the Weekender's Managing Editor and Breaking News Reporter. He has more than 20 years experience as a journalist, working with some of Australia's leading media organisations. In 2023, he was named Editor of the Year at the Mumbrella Publish Awards.