RBA Update - 8 July 2025

To much of the market’s surprise where a 97% chance of a rate cut had been priced in, the Board decided to keep the cash rate steady at 3.85%. The decision was made by majority vote, with 6 members in favour and 3 against. While inflation has continued to moderate and is now within the 2–3% target range, recent data showed slightly stronger than expected price pressures. With the cash rate already 50 basis points lower than earlier this year, the Board judged it was appropriate to wait for more evidence that inflation is sustainably sitting around 2.5%.

The Board noted that the outlook remains uncertain. Globally, trade tensions and financial market shifts add risk, while domestically, household incomes and demand are improving, but productivity remains weak and unit labour costs are high. Labour markets are still tight, although wage growth has eased. The Board remains focused on its goals of price stability, full employment and said it is prepared to act as future data becomes available.