The Reserve Bank of Australia held its cash rate target steady at 4.35% on Tuesday, keeping policy on hold after three increases this year, the latest in May. The decision, effective from 17 June 2026, was unanimous.
The hold followed the Board's 25 basis point increase in May, when it judged that inflation was likely to remain above target for some time and that the risks remained tilted to the upside. The Board said it judged it appropriate to leave the cash rate unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.
INFLATION KEEPS POLICY TIGHT
Australian inflation eased to 4.2% in April, still well above the midpoint of the RBA's 2-3% target band. The Board said headline and underlying inflation are still too high, and that higher fuel prices are passing through to the prices of other goods and services.
The Board said it remains focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through.
The Board noted signs that growth in consumer spending is slowing, that housing prices are falling in some capital cities and that the unemployment rate was higher than expected in April.
PAUSE AFTER MAY MOVE
The June decision keeps the cash rate at 4.35%, after three increases since the beginning of the year. The Board said financial conditions have tightened in response to those increases, with money market interest rates and government bond yields rising and the exchange rate appreciating.
The Board said monetary policy is well placed to respond to developments and that it will do what it considers necessary, including increasing the cash rate target further if required.
It noted that growth in business investment is strong and that credit is readily available to both households and businesses.
The Board said it will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. The Board's next decision is due on 11 August 2026.