The decision by RBA to not change the cash rate comes as Trump tariffs loom
THE Reserve Bank of Australia has held the official cash rate at 3.85 per cent in a surprise move, leaving mortgage holders and first-home buyers hoping for winter relief disappointed.
The decision defied strong market consensus, with financial markets having priced in a 97 per cent chance of a rate cut. It comes despite further signs of easing inflation, with annual trimmed mean inflation — the RBA’s preferred measure — falling to 2.4 per cent in May from 2.8 per cent in April.
“I’m sure borrowers and hopeful buyers will be disappointed by the Reserve Bank’s decision today to keep the nation’s official cash rate on hold,” Mortgage Choice chief executive Anthony Waldron said. “Today’s decision doesn’t mean further cuts are off the table.”
Mr Waldron said a rate cut could follow the bank’s August meeting, should the June quarter Consumer Price Index confirm inflation remains within the 2–3 per cent target range.
“There are four monetary policy board meetings still to go this year, so rates could drop further,” he said. “That said, monthly data can be volatile, and the Reserve Bank will likely place more importance on the quarterly CPI figures, which will be released on 30 July, as it considers another cut to the cash rate.”
REA Group senior economist Anne Flaherty said the decision could temper house price growth.
“Today’s decision to hold may slow the pace of price growth seen in the months following the February and May cuts,” she said. “Nationally, prices are up 3.2% since the start of the year, adding around $26,000 to the median price of a home.”
The RBA cited uncertainty around inflation and the global outlook, including the impact of US President Donald Trump’s looming trade tariffs, as reasons for the hold.
