The Reserve Bank of Australia board voted unanimously to hold the cash rate at 4.35 per cent at its June meeting, pausing after three consecutive 25-basis-point increases in February, March, and May that raised the rate from 3.60 per cent at the start of the year.
Each of the three prior hikes in 2026 was passed on in full by the major banks. The pause was the first since the current tightening phase began in February.
Governor Michele Bullock said the board was assessing the pass-through of previous increases on household spending before making its next decision. 'Today's decision does not rule out further tightening,' she said. She also said: 'We have permanently higher prices for everything because of the inflation we have experienced in the past.'
Underlying inflation remains at 3.4 per cent, above the RBA's 2 to 3 per cent target band. Headline CPI is running at 4.2 per cent year-on-year, partly driven by fuel cost increases related to the Middle East conflict.
Financial markets are pricing approximately a 50 per cent probability of one further rate rise before the end of 2026. Commonwealth Bank economists forecast rates on hold into 2027, with a projected peak of 4.60 per cent if one more hike follows.
The RBA's next meeting is in August. June-quarter CPI data, due in late July, will be the critical data point for that decision.
