Key takeaways
In a unanimous decision, the RBA’s Monetary Policy Board left the cash rate unchanged at 4.35%.
After 75bp of hikes, the Board acknowledges that “…financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected.”
It is likely the RBA will remain on hold for the remainder of this year, but inflation challenge will remain the main concern for policy makers in the next few quarters.
As widely expected, the Reserve Bank of Australia has held the cash rate today at 4.35% at its June meeting.
But in a move that was less expected, it explicitly signalled that further hikes remain on the table.
The final sentence of the media release added the clause “including increasing the cash rate target further if required” to the usual remark about doing what is needed to achieve its policy goals
After three consecutive increases in 2026, today’s decision provides borrowers with some breathing room.
This is a relief for borrowers, who've already had three rate hikes this year, adding hundreds of dollars a month to their loan repayments.
Is this the end of rate rises?
Inflation is still high, which could prompt the RBA to hike rates again, but three of the four big banks are now predicting no further rate rises and rate cuts in 2027.
Only Westpac is predicting two further rate rises this year.
Clearly, our economy is slowing, unemployment is rising slightly, and housing markets are subdued, so this should give the RBA comfort in its fight against inflation.
Interestingly, financial markets are still pricing in a 60% probability of one further rate rise by the end of 2026.
What the RBA said
The RBA Monetary Policy Board delivered another short Statement today, noting that “…headline and underlying inflation are still too high” and that it remains “…focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through.”
This emphasises that inflation remains the predominant focus of the Board at present, especially given the Board’s view that “…there are signs the economy is slowing as expected.”
With inflation taking precedence over growth for the time being, it is too soon to expect any dovish shift in the Bank’s broader narrative about monetary policy.
The RBA will now focus on what comes next.
Domain’s Chief Residential Economist, Dr Nicola Powell, explained that the June meeting was less about the decision itself and more about what comes next.
The RBA has already delivered a sharp adjustment, lifting rates three times in five months and returning policy to restrictive settings. This has materially reduced borrowing capacity and is feeding directly into softer housing demand, particularly in more interest-rate sensitive markets like Sydney and Melbourne.
We are now starting to see clearer evidence of that. The lift in unemployment alongside a fall in employment points to a gradual cooling in labour market conditions and reinforces that tighter policy is gaining traction across the economy.
This creates a more complex backdrop for the RBA. Inflation is still too high, but the economy is clearly losing momentum.
How the Bank balances these competing pressures will be critical, not just for monetary policy, but for housing market confidence and activity over the next 6–12 months.
- Also read:Australia’s Building Crisis Is Getting Worse – What It Means for Property Investors | Property Insiders
- Also read:Australian housing market update | June 2026
- Also read:This week’s Australian Property Market Update – Latest Data, State by State June 16th 2026
- Also read:Melbourne housing market update | June 2026
- Also read:National Vacancy Rate Holds at 1.2%| SQM Research
Dr Powell said ...
From a housing market perspective, this transition matters.
After a period of strong growth, higher borrowing costs have already slowed price momentum, reduced purchasing power and shifted buyer behaviour. A prolonged pause would reinforce a period of consolidation, while any signal of further tightening would add to downside risks.
Ultimately, the June decision marks a turning point in the cycle.
The RBA has done a significant amount of heavy lifting, and there is still more of that tightening flowing through the economy.
What happens next will depend less on the level of rates and more on how the Bank responds to the evolving balance between inflation and growth.
Rate hold offers little relief as cost pressures continue to bite
CPA Australia says the Reserve Bank’s decision to hold interest rates will provide a brief reprieve for borrowers but warns that small businesses and households remain under sustained financial pressure.
Gavan Ord, Business and Investment Lead at CPA Australia, said while a pause in rate rises was welcome, it does little to alleviate the broader cost burdens facing Australian businesses and consumers.
“A hold on interest rates will be welcomed by many businesses and households, especially those who are already stretched by higher borrowing costs,” Mr Ord said.
“However, the reality is that cost pressures remain high – inflation is still persistent across essential goods and services, fuel costs remain volatile, and consumer confidence continues to be subdued.”
Mr Ord said small businesses, particularly those with high transport and fuel dependency, continue to face a challenging operating environment.
“Fuel isn’t optional – it’s fundamental – and when prices rise, costs flow through immediately,” Mr Ord said.
“For transport, trades, agriculture and regional businesses, fuel is one of the largest and most unpredictable expenses. Combined with higher interest rates and weaker demand, many are operating with very little buffer.”
CPA Australia said the current environment reinforces the need for governments to focus on long-term reforms to improve operating conditions for small businesses.
“What small businesses need most is decisive government action to reduce red tape and improve the overall business environment,” Mr Ord said.
“Removing unnecessary regulatory burden helps businesses focus on growing, employing people and serving customers.”
Mr Ord said improving productivity and reducing compliance costs would do more to support business resilience than short-term measures.
“Short-term relief can help, but it won’t fix a system where businesses are dealing with persistent cost pressures and regulatory complexity,” he said.
