Australia: Central Bank leaves rates unchanged in July
Latest bank decision: At its meeting on 8 July, the Central Bank decided to leave the cash rate target unchanged at 3.85%.
Bank in wait-and-see mode: The Bank decided to stay put to evaluate the impact of the 50 basis points of rate cuts delivered so far this year, in order to ensure inflation is on track to stabilize at the midpoint of the 2.0–3.0% target range before embarking on further cuts. This decision came in the context of the economy evolving broadly as the Bank expected, and with global uncertainty elevated due to U.S. tariff policy changes.
Monetary easing to resume: The Central Bank suggested it would cut rates further going forward, which chimes with our panelists’ forecasts of roughly 50 basis points of extra cuts by end-2025.
Panelist insight: On the outlook, EIU analysts said:
“We […] expect the RBA to continue the interest-rate cutting cycle that it enacted in February and May with two further cuts before the end of 2025. It will then cut rates once more in early 2026 before switching to a neutral policy stance, given concerns over lingering inflationary pressures. By that point, the official cash rate will be at 3.1%—a level that we consider to be neutral.”