Reserve Bank of Australia decision on Tuesday comes after three consecutive cash rate hikes this yearFollow our Australia news live blog for latest updatesGet our b
The Reserve Bank has left its official interest rate on hold at 4.35%, with the RBA decision expected after economic activity slowed and unemployment hit a four-year high. The cash rate was set at the RBA meeting on Tuesday.
Photograph: AAP The Reserve Bank has left its official interest rate on hold at 4.35%, with the RBA decision expected after economic activity slowed and unemployment hit a four-year high. The cash rate was set at the RBA meeting on Tuesday.
Photograph: AAP RBA interest rates: Reserve Bank holds official cash rate at 4.35% as economy slows and unemployment rises Reserve Bank of Australia decision on Tuesday comes after three consecutive cash rate hikes this year Follow our Australia news live blog for latest updates Get our breaking news email , free app or daily news podcast The Reserve Bank has left its official interest rate on hold at 4.35%, after economic activity slowed and unemployment hit a four-year high.
The widely expected decision on Tuesday will bring little relief to mortgage holders, already strained by the RBA’s three consecutive rate hikes earlier in 2026.
For an owner-occupier with an average-sized new mortgage of $745,000, now paying a typical rate of 6%, the year’s rate increases have seen monthly repayments soar from $4,114 to $4,467. A fourth rate increase would have added another $120.
Households barely increased spending on non-essentials in the three months to March but cut back on saving to spend on essentials like electricity and fuel .
Slower consumer spending saw real GDP growth falter to just 0.3% in the March quarter, from 0.9% in the December quarter of 2025.
Unemployment jumped to 4.5% in May for the first time since 2021.
Australian housing was already cooling before the budget – but how cold it gets depends on two key factors Read more Justin Zook, a senior director at Fitch Ratings, said interest rate hikes would probably hit household spending harder in 2026 than they had in 2022 and 2023, partly because households had less money in savings.
“Households just don’t have … those piles of cash that they had because they weren’t out spending money during the pandemic,” Zook said.
All four major banks expected interest rates would stay on hold on Tuesday. Top economists at ANZ, Commonwealth Bank and NAB had forecast rates had hit their peak and would will start to fall from the middle of 2027.
Financial markets, though, have bet a hike is more likely than not over the next 12 months.
Westpac had predicted the cash rate would rise in August and September, with no cuts until 2028. Westpac’s chief economist, Luci Ellis, has predicted inflation will peak at 4.7% in late 2026, higher than the RBA’s forecast.
In a note on Friday, Ellis wrote higher fuel prices from the US-Israel war on Iran would push up freight and other costs, keeping inflation high over 2026. Westpac expects petrol prices of 205 cents a litre and diesel at 239 cents a litre on average over the coming three months after the government’s fuel excise cut ends.
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