The Reserve Bank of Australia is widely expected to hold its cash rate steady at 4.35% when it announces its decision Tuesday afternoon, with cooling inflation giving the board room to stay on hold rather than tighten further.
All four of Australia’s major banks now forecast the RBA will leave rates unchanged at this meeting, a shift in consensus after June’s inflation data came in below expectations, with headline CPI at 3.8% and the trimmed mean measure at 3.6%. That cooling trend has given the board more comfort to pause, even with inflation still running above where policymakers would ultimately like it.
Not every forecaster agrees. One major bank remains an outlier, still calling for a rate hike at this meeting and another to follow in September, pointing to the recent jump in energy prices tied to Middle East tensions as a reason the RBA might not be finished tightening just yet. That disagreement is exactly what makes Tuesday’s announcement, followed by Governor Michele Bullock’s press conference an hour later, worth watching closely for the Australian dollar.
A hold with dovish-leaning commentary would likely weigh on the Australian dollar, while any surprise hike, or even a hold paired with hawkish guidance about future meetings, could give AUD a meaningful lift. Either way, the decision lands at a moment when energy-driven inflation risk and a genuinely split forecaster consensus make this a less predictable meeting than the headline “hold expected” framing might suggest.
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