MNI BRIEF: RBA Leaves Rate At 4.35%, Adjusts CPI Outlook Higher

The Reserve Bank of Australia board held the cash rate steady at 4.35% Tuesday, noting services inflation had eased slower than forecast while repeating March’s message that it would not rule “anything in or out.”

Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high," the board said in its statement. "The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks."

The board also released its Statement on Monetary Policy, which included updated forecasts. While the RBA still expects CPI to return to its 2.5% mid-band target by June 2026, it believes the path there will be a more elevated one, with headline inflation at 3.8% over the next two quarters, up from the 3.3% by Q2 and 3.3% in Q3 predictions made in February. Its trimmed mean CPI outlook is also slightly more elevated at 3.8% in Q2 and 3.4% in Q3, up from 3.6% and 3.1%.

Governor Michelle Bullock will address the media at 3:30pm AEST.