Overview
- The Reserve Bank of Australia left the cash rate at 4.35% in a unanimous board decision on Tuesday, saying it will raise the rate again if upside inflation risks materialise.
- The RBA’s updated forecasts show headline and underlying inflation staying above the 2–3% target band through much of 2027 before easing in the second half of that year.
- Trimmed mean inflation remains elevated at about 3.6%, which the bank says, together with a tight labour market and pass-through from higher fuel costs, keeps upside risks to prices alive.
- Markets and the big four banks had widely expected a pause and now largely price no more moves this year while pencilling in cuts in 2027, though swaps still show a meaningful chance of another hike if data surprises.
- Separately, the Reserve Bank of India has also kept policy on hold with a neutral stance at a 5.25% repo rate, citing supply-driven inflationary pressures and external vulnerabilities that limit scope for early easing.