Australia Interest Rate

Central Bank holds rates in June

Hold after three straight hikes: At its June meeting, the Central Bank decided to hold the cash rate at 4.35%, following 75 basis points of hikes earlier in the year.

Bank takes wait-and-see approach: The Bank’s decision was likely driven by a desire to assess the impact of previous monetary tightening before considering hiking rates again. The recent drop-off in energy prices and short-term inflation expectations as well as signs the economy is softening likely further influenced the hold.

Further increases are possible ahead: The Bank’s forward guidance was open-ended. Another rate hike is a distinct possibility later this year as the Bank looks to quell inflation.

Panelist insight: On the outlook, Goldman Sachs analysts said: “RBA communications front-focused inflation concerns, that the macro data have so far evolved in line with RBA forecasts, and that the RBA views the current softening in growth is expected, necessary, and no impediment to higher rates. We note that the RBA’s latest forecasts were calibrated on one more hike this cycle. Looking ahead, we continue to lean towards another 25bp rate hike at August’s meeting – contingent on a likely uncomfortably high 2Q2026 CPI report.” United Overseas Bank’s Lee Sue Ann said: “For now, our base case remains that the RBA will extend its pause over the coming meetings. This reflects our view that restrictive financial conditions, together with weaker household demand and rising unemployment, will gradually dampen inflationary pressures. However, risks remain tilted in both directions. A sustained pickup in inflation expectations or continued strength in wage growth could prompt renewed tightening, while a sharper-than-expected slowdown in activity would strengthen the case for policy easing into 2027.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Australian interest rate projections for the next ten years from a panel of 21 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Australian interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Australian interest rate projections.

Want to get access to the full dataset of Australian interest rate forecasts? Send an email to info@focus-economics.com.