RBA kept the cash rate target unchanged at 4.10% today, in line with broad market expectations. While the central bank welcomed the continued decline in underlying inflation, it emphasized a “cautious” stance due “risks on both sides”.
Recent data suggests inflation is easing in line with forecasts, but RBA reiterated that it needs greater confidence that this trend will continue sustainably toward the midpoint of the 2–3% target band.
RBA highlighted “notable uncertainties” around domestic consumption and labor market dynamics. Internationally, there are concerns over the escalating US tariff policy, noting that such developments are already affecting global confidence.
The risk of further tariff expansion or retaliatory measures from other countries could amplify the drag on global activity. Inflation could move in “either direction” depending on how households and firms react to the shifting macroeconomic environment.
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