The Reserve Bank of Australia left the cash rate target at 4.35% and said
inflation remains high, warning it will take all necessary measures — including
further increases in the cash rate target if required — to curb inflation. The
Board noted recent Middle East developments have eased oil prices and reduced
near-term inflation risk but cautioned that resolution is at an early stage and
there are plausible scenarios where inflation exceeds May baseline forecasts
while activity is weaker; global oil-supply issues could continue to pressure
energy prices and inflation. The unanimous decision was largely priced; the swap
market implies about a 30% chance of an August hike and roughly 16bps of
tightening priced for the year.
