RBA interest rates AS IT HAPPENED: Interest rates on hold at 4.35 per cent; RBA Governor Michele Bullock unable to rule out future hikes

Bullock remains adamant that the RBA does not expect Australia to collapse into a recession.

Instead, she explained that the aim is to “slow” the economy through monetary policy, not shrink it.

“We don’t want to put it into recession, we want to slow it enough that we can bring the inflation rate back down to our target, while trying to keep employment as growing as well as we can, and the unemployment rate as low as possible. ” Bullock said.

“If it looked like our forecasts were suggesting that the unemployment rate was going to increase substantially, then we would have to think about whether the monetary policy settings were appropriate.”

Bullock acknowledged economists are divided over whether the next meeting will bring a rate cut, rise, or hold.But she avoided offering her own prediction, instead refusing to rule anything out.“There’s a bit of a split here, I think, amongst the economists,” Bullock said.“I think some are calling for cuts, but not till next year, so it’s not imminent.“I can’t rule out that if inflation doesn’t respond in the way we expect it to do, then we might have to do more. I’m just not ruling that out.”

Bullock was asked her thoughts on whether the sharp drop in property demand could ease headline inflation.

She said it was too early to determine the impact of the budgetary reforms.

It is now a waiting game as the RBA observes the flow-on effect of the past three rate hikes too. 

“We have to wait for these things to settle down, because at the moment people are a little unsure, things aren’t legislated yet, they’re waiting,” Bullock said.

“There’s a whole lot of things affecting the loss of momentum in the housing market.

RBA Governor Michele Bullock is speaking now and was quick to remind Australians that today’s decision does not “rule out further policy tightening”.

She said inflation remained in the red zone and the central bank needed time to assess the impact of the previous three rate cuts.

“I understand this is a difficult period for all households, which is why it is so important we [address] inflation now,” the governor said.

Buyer confidence plummeted following the 2026 federal budget, but today’s RBA decision could inspire a recovery in demand.

Property Investment Group and OpenCorp chief executive Cam McLellan said he expects the property market to shift quite quickly in response to a steady cash rate.

“Today’s RBA decision could be remembered as the moment Australia’s property market stopped waiting,” he said.

“For the past six months, uncertainty around interest rates, the federal budget and the broader economy has kept many buyers on the sidelines.

“But markets don’t move when rates are cut; they move when people become confident enough to believe cuts are coming.”

President Donald Trump may have claimed that a US-Iran peace deal may be “all signed,” but experts say it will not mean immediate economic stability.

Oxford Economics Australia’s Harry Murphy Cruise said the inflationary consequences of a months-long oil shock “simply cannot be put back in the bottle”.

“We should be cautious about celebrating the interim agreement until oil and other commodities are once again freely flowing through the Strait of Hormuz,” he said.

“Much of the CPI hit from higher input, shipping and agricultural costs is still working its way through to consumer prices, meaning underlying inflation pressures will not dissipate immediately.”

Murphy Cruise said today’s RBA decision was not an early signal of any impending rate cuts.

He warned that rates will likely remain at current levels until at least the end of 2027.

Treasurer Jim Chalmers said it was “reassuring” to see the cash rate remain steady.

“It doesn’t make life any easier, but it doesn’t make life harder,” Chalmers said.

He added that inflation is still at an unsatisfactory level and that the war in the Middle East will likely have a “long tail” as the local economy heads into recovery mode.

“We still expect the situation in the Middle East to put upward pressure on inflation,” he said.

“It is a welcome decision in the face of all this economic uncertainty.”

The RBA Board said that, while it was “appropriate” to leave the cash rate unchanged, inflation remains a key problem.

Inflation jumped to 4.6 per cent in Australia in March as the ongoing Iran war and subsequent fuel shock hit the economy.

“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 central bank said in a statement.

“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.”

The decision to keep rates steady at 4.35 per cent was unanimous.

A total of nine people on the Monetary Policy Board vote on interest rate movements, including RBA Governor Michele Bullock.