Overview
- On Tuesday the Reserve Bank of Australia left the cash rate at 4.35% and said the Board had actively discussed a further hike.
- The RBA downgraded labour productivity for 2026 to a 0.5% fall and raised its unemployment forecast to about 4.5% by the end of 2026.
- Trimmed‑mean inflation remains in the mid‑3% range, keeping policy under pressure and prompting markets to push up the odds of a year‑end hike.
- The bank flagged housing costs, wage increases and higher fuel prices linked to the Middle East as upside risks and said upcoming July CPI on August 26 and July labour data on August 20 will be decisive.
- Governor Michele Bullock said cuts are not on the near‑term agenda and that weaker productivity will require a period of subdued growth that will weigh on households and mortgage holders.