Reserve Bank of Australia Holds Rates Steady but Remains Worried About Inflation

Australia's central bank, the Reserve Bank of Australia (RBA), kept interest rates unchanged at 4.35% for a second consecutive meeting on Tuesday. The bank cited slowing economic growth as expected, but warned it may still raise rates if necessary to tame inflation. The RBA maintains its target range of 2% to 3% for inflation and said it would take action if inflation risks rise.

While inflation came in lower than predicted in the second quarter, the housing market performed worse than expected. The RBA has already raised rates by 75 basis points this year to erase the easing from 2025 and is taking steps to ensure demand growth stays restrained. Inflation is projected to fall back to the target band by the end of next year and further to 2.6% by the end of 2027.