RBA Holds Rates at 4.35%, Flags Hike Discussion and Inflation Risks

The Reserve Bank of Australia maintained its official cash rate at 4.35%, a decision widely anticipated by markets. Governor Sandra Bullock struck a notably hawkish tone, emphasising persistent upside risks to inflation.

Bullock disclosed that board members had actively discussed the case for a rate increase, reinforcing the bank’s tightening bias. This pushed short-dated Australian government bond yields higher as markets repriced the path of monetary policy.

The Australian dollar strengthened following the communication, with traders interpreting the comments as a signal that rate cuts remain premature and the next move could still be a hike.