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RBA unexpectedly stands pat on interest rates

By Michele Maatouk

Date: Tuesday 08 Jul 2025

RBA unexpectedly stands pat on interest rates

(Sharecast News) - The Reserve Bank of Australia held interest rates at 3.85% on Tuesday, saying it needed "a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis".
Australia's central bank said that six policymakers voted in favour of standing pat, with three against. Analysts had been expecting a 25 basis points rate cut to 3.6%.

"While recent monthly CPI Indicator data suggest that June quarter inflation is likely to be broadly in line with the forecast, they were, at the margin, slightly stronger than expected," the RBA said.

"With the cash rate 50 basis points lower than five months ago and wider economic conditions evolving broadly as expected, the board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5% on a sustainable basis."

ING said this outcome appears to reflect a matter of timing rather than a shift in policy direction.

"The RBA will closely monitor upcoming quarterly inflation and monthly employment data ahead of its next meeting in August. Governor Michele Bullock also flagged concerns around rising costs in home construction and durable goods, which will be key areas to watch in the next CPI release," it said.

"We continue to expect a moderation in trimmed CPI inflation in 2Q, keeping the door open for a potential rate cut next month. The RBA also placed particular emphasis on global developments and trade-related risks, and how these may affect domestic conditions - factors that should become clearer by the time of the next meeting."

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