RBA holds rates at 4.35%, signals further hikes still possible - recap
AUD/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Bank of America | Bullish | 0.7000 |
Westpac | Bullish | 0.7200 |
UOB | Bullish | 0.7075 |
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The RBA held its cash rate at 4.35% in June but signalled further hikes remain possible, with Westpac forecasting a move at the August meeting if inflation stays elevated. Justin had the info yesterday: RBA leaves cash rate unchanged at 4.35% in June monetary policy meeting, as e
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4 itemsCBA sees RBA on hold for rest of 2026 after third consecutive hike to 4.35%
The desk anticipates that the Reserve Bank of Australia (RBA) will maintain its cash rate at 4.35% for the remainder of 2026, with potential rate cuts beginning in 2027. This outlook is supported by Commonwealth Bank's recent analysis, which highlights inflation concerns and a downgraded GDP forecast. Per the full note [source], the RBA's decision to raise rates for the third consecutive time reflects a cautious approach to monitoring economic developments, particularly in light of inflationary pressures stemming from energy costs. The desk notes that the market's current pricing may not fully reflect the potential for an August rate hike if inflation data surprises to the upside.
Westpac sees upside inflation risks after RBA lifts cash rate to 4.35% in 8-1 vote
The desk sees the RBA's recent rate hike as a signal of persistent inflation pressures, particularly influenced by geopolitical factors. Per the full note [source], the RBA raised its cash rate by 25 basis points to 4.35%, with an 8-1 vote reflecting a stronger consensus than the previous meeting. However, the dovish tone from Governor Bullock suggests that while further tightening is possible, the June meeting could see a pause. This nuanced stance is critical as it indicates a balancing act between combating inflation and acknowledging potential economic headwinds.