The Reserve Bank of Australia has left interest rates on hold for the first time in 2026 as economic conditions weaken and questions linger over a potential peace deal in the Middle East.
After three consecutive rate rises, the central bank's monetary policy board voted unanimously to leave the cash rate steady at 4.35 per cent on Tuesday.
The decision was anticipated by the majority of economists and financial markets.
Inflation still too high
“The Board remains focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through,” the RBA Board said in a statement accompanying the interest rate decision.
“To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target.”
This year’s rate rises were working as expected, the RBA said
“Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected. But inflation is still too high and the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.”
The decision to keep rates on hold was unanimous, the RBA board said.
