The Reserve Bank of Australia lifted the cash rate by 25bp to 4.85%, its highest level since 2008, while updated forecasts implied a more hawkish inflation profile. However, the decision was split 6–3 and the growth outlook was softer, alongside the removal of explicit further hike guidance. Taken together, those elements point to a conditional pause rather than the start of a renewed tightening cycle.
One market economist expects the RBA to remain on hold for an extended period, with the earliest rate cut pencilled in for November 2027. Earlier easing is framed as contingent on unemployment rising above 5% more quickly and housing activity slowing materially, which would bring the timeframe forward to late Q3 or Q4 2027. The same view anticipates the Australian Dollar (AUD) underperforming into year-end.
