The Reserve Bank of Australia (RBA) has kept interest rates unchanged at 4.35% for the second time.

The Reserve Bank of Australia (RBA) kept interest rates unchanged at 4.35% for the second time, reiterating its readiness to raise rates again if inflation risks increase. It forecasts inflation to return to its 2.5% target by early 2028.

On August 11, 2569, at 11.32:2 AM, Bloomberg News reported that the Reserve Bank of Australia (RBA) decided to keep its policy interest rate at 4.35% for the second consecutive meeting, as expected by the market, amid persistent inflationary pressures and signs of slowing down in the labor market and property sector.

The RBA stated after its August 11 meeting that the committee remains focused on preventing high inflation from becoming entrenched in the economy. While current monetary policy is already relatively tight, the central bank is prepared to take further measures, including raising interest rates again, if inflation risks increase.

This decision comes after the RBA raised interest rates at its first three meetings of 2026, leaving the central bank assessing whether current interest rates are tight enough to bring inflation back to its target or if further rate hikes are necessary.

One of the major risks is a potential war between the United States and Iran, which would impact global energy markets and keep oil prices high. Negotiations to end the conflict have yet to yield a resolution, and uncertainty regarding the reopening of the Strait of Hormuz continues to put pressure on energy prices and global inflation trends.

However, Australia's four largest banks assess that the RBA's interest rate hike cycle is likely over and expect the central bank to keep interest rates at their current level for some time before shifting to monetary easing.

Luci Ellis from Westpac Banking Corp. stated that higher borrowing costs, coupled with the end of tax breaks for real estate investors, are pressuring the housing market, reflecting the effects of monetary and fiscal policies working in synergy.

Housing prices in Australia have begun to decline, particularly in Sydney, where prices have fallen 5.3% from their peak. However, the median value of housing in Sydney remains high at A$1.24 million (approximately US$870,000), reflecting the significant price increases that had occurred previously.

Since the last RBA meeting in mid-June, Australia's unemployment rate has remained stable around 4.4%, while employment remains strong. Inflation remains above the target, although the latest figures were slightly lower than expected, and household spending remains resilient, despite weak consumer confidence.

Simultaneously, the RBA released its quarterly economic forecasts in its Statement on Monetary Policy, projecting that both headline and core inflation will fall to 2.5%, the midpoint of its 2–3% target range, only by early 2028.

On the labor market front, the RBA slightly revised its unemployment rate estimate upwards from three months ago, but still assesses the labor market as remaining somewhat tight.

This decision to keep interest rates unchanged brings the RBA's direction closer to that of the U.S. Federal Reserve (Fed), which at its most recent meeting kept interest rates unchanged for the fifth consecutive time. However, weaker U.S. employment figures, along with signs of slowing inflation, may reduce pressure on the Fed to continue pursuing a tight monetary policy.

RBA Governor Michele Bullock is scheduled to hold a press conference to provide further details on monetary policy prospects and will testify before the Australian Parliament along with senior central bank officials on Friday.

Reference: bloomberg.com

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