The Reserve Bank of Australia has opted to keep interest rates on hold as the economy slows and unemployment rises.
It had been widely expected the RBA would keep the official cash rate at 4.35 per cent at Tuesday’s meeting, following three consecutive hikes earlier in 2026.
In a statement, the central bank said inflation was still too high and economic activity needed to slow further.
“To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target,” the board said.
“There are signs that the economy is slowing as expected. But inflation is still too high and the board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.
“It will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.”
Speaking after the decision, RBA Governor Michelle Bullock warned that today’s hold does not rule out further policy tightening if required.
“I want to be very clear that inflation remains too high,” Governor Bullock said.
“Leaving rates on hold today will allow the board to assess how these previous increases are flowing through the economy.
“I understand that this is a difficult period for all households, that’s why it’s so important we get on top of inflation now.
“High inflation hurts all Australians, especially the most vulnerable.”
