16.06.202604:36:16UTC+00RBA Holds Key Rate as Expected

The Reserve Bank of Australia left the cash rate unchanged at 4.35% at its June meeting, in a unanimous decision that matched market expectations, after three rate hikes earlier in the year. The decision reflects a notable pickup in inflation in the second half of 2025, which is expected to remain elevated into 2026 due to stronger capacity pressures and higher fuel and commodity prices associated with the Middle East conflict. Although oil prices have eased recently, they remain above pre-conflict levels, and there is clear evidence of cost pass-through to a broad range of goods and services. Labour market conditions are mixed: unemployment rose in April, but most other indicators remain resilient. Business investment is still solid, and credit conditions are accommodative. Overall, these developments point to some cooling in demand, but not enough to be confident that inflation will return to target. Short-term inflation expectations have edged lower but are still above levels seen earlier in the year.