They hinted at relief—then pulled back. What’s really going on with the RBA?
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Just when it seemed like financial relief was on the horizon, the outcome took an unexpected turn.
A highly anticipated decision from Australia’s top economic authority has left many households holding their breath—again.
Here’s what really happened behind the closed doors of the Reserve Bank.
The Reserve Bank of Australia defied expectations this week, keeping interest rates on hold at 3.85 per cent—despite mounting pressure from economists and mortgage holders alike.
Many had anticipated a second consecutive rate cut, which would have marked the first back-to-back easing since the early days of the pandemic in March 2020.
Instead, the RBA opted to hold its position, citing the need for ‘more information’ before making any further moves. In its monetary policy statement, the board noted: ‘The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong.’
However, the central bank also acknowledged it remained cautious, given the uncertainty around both demand and supply in the economy.
‘The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis,’ it stated.
This pause—though disappointing for many—was not necessarily a sign the RBA was abandoning its easing cycle altogether.
Governor Michele Bullock fronted the media after the decision, revealing the board had not ruled out future cuts, but timing had played a key role in this particular outcome.
‘The board's strategy has been to bring inflation down while avoiding a sharp rise in unemployment,’ Bullock said.
‘This strategy has meant that we didn't take rates as high as some other countries, and so it may be that we don't need to reduce rates as much as some other countries have done.’
Bullock clarified that the board’s 6-3 split decision wasn’t about a change in direction—just a matter of pacing.
‘The board's decision today was recognising that, look, there's a few weeks, five weeks, until the next meeting... the difference in opinion amongst the board wasn't so much directionally, it was about timing,’ she explained.
Adding to that, she dismissed suggestions the RBA was deliberately holding interest rates higher to preserve room for future stimulus should a major economic shock hit, such as a global trade conflict.
‘Pre-COVID, interest rates were down... we had hardly any room to move. So all I'm saying is if something bad does happen, we have more room to move. But we are not deliberately holding interest rates higher in order to give ourselves more power.’
One challenge the RBA faced this time around was the lack of fresh inflation data since its last meeting in May—the quarterly figures are not due for release until later this month. With the next board meeting only weeks away, some analysts believe this short window could explain the central bank’s more cautious stance.
Still, for many mortgage holders already under pressure, the delay in relief felt like a blow.
Graham Cooke, head of consumer research at Finder, said some homeowners had been counting on the RBA to ease conditions.
‘There is still a portion of homeowners who are in severe mortgage stress doing it tough,’ he said.
‘It's soul-crushing when you think relief is coming only to find that you need to wait another couple months. Cut or not, there is still a significant difference between the average and lowest rate available.’
Meanwhile, finance editor Chris Kohler said the RBA’s decision had caught even seasoned economists off guard.
‘We're expecting these tight monetary policy conditions to be eased now that we've vanquished, essentially, this inflation demon that we've been battling,’ Kohler said.
‘Now, not only were the big economists expecting today to be an interest rate cut, but they were expecting multiple rate cuts for the rest of this year, anywhere between one and three more on top of today. So now they're really going to have to go back to the drawing board and decide what is Michele Bullock's game plan here, what are we doing?’
For now, the RBA has chosen patience. Whether that patience pays off—or leaves borrowers continuing to shoulder the weight—will be clearer by the time the next board meeting rolls around.
If you’re trying to make sense of how the RBA’s decisions trickle down to everyday finances, check out this illuminating story that breaks down the expected mortgage relief ahead of the rate cut.
It unpacks what the experts are forecasting—and what those figures might mean for your own repayments.
Read more: It’s ‘all but certain’: Why some economists believe relief is finally coming for your mortgage
With so many households hanging on for financial relief, each RBA decision feels like another waiting game—especially for those on fixed incomes or managing tight budgets.
Have you felt the impact of these rate decisions on your day-to-day living costs?
A highly anticipated decision from Australia’s top economic authority has left many households holding their breath—again.
Here’s what really happened behind the closed doors of the Reserve Bank.
The Reserve Bank of Australia defied expectations this week, keeping interest rates on hold at 3.85 per cent—despite mounting pressure from economists and mortgage holders alike.
Many had anticipated a second consecutive rate cut, which would have marked the first back-to-back easing since the early days of the pandemic in March 2020.
Instead, the RBA opted to hold its position, citing the need for ‘more information’ before making any further moves. In its monetary policy statement, the board noted: ‘The Board continues to judge that the risks to inflation have become more balanced and the labour market remains strong.’
RBA holds rates steady at 3.85 per cent. Image source: Pexels/Ivan Samkov
However, the central bank also acknowledged it remained cautious, given the uncertainty around both demand and supply in the economy.
‘The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis,’ it stated.
This pause—though disappointing for many—was not necessarily a sign the RBA was abandoning its easing cycle altogether.
Governor Michele Bullock fronted the media after the decision, revealing the board had not ruled out future cuts, but timing had played a key role in this particular outcome.
‘The board's strategy has been to bring inflation down while avoiding a sharp rise in unemployment,’ Bullock said.
‘This strategy has meant that we didn't take rates as high as some other countries, and so it may be that we don't need to reduce rates as much as some other countries have done.’
Bullock clarified that the board’s 6-3 split decision wasn’t about a change in direction—just a matter of pacing.
‘The board's decision today was recognising that, look, there's a few weeks, five weeks, until the next meeting... the difference in opinion amongst the board wasn't so much directionally, it was about timing,’ she explained.
Adding to that, she dismissed suggestions the RBA was deliberately holding interest rates higher to preserve room for future stimulus should a major economic shock hit, such as a global trade conflict.
‘Pre-COVID, interest rates were down... we had hardly any room to move. So all I'm saying is if something bad does happen, we have more room to move. But we are not deliberately holding interest rates higher in order to give ourselves more power.’
One challenge the RBA faced this time around was the lack of fresh inflation data since its last meeting in May—the quarterly figures are not due for release until later this month. With the next board meeting only weeks away, some analysts believe this short window could explain the central bank’s more cautious stance.
Still, for many mortgage holders already under pressure, the delay in relief felt like a blow.
Graham Cooke, head of consumer research at Finder, said some homeowners had been counting on the RBA to ease conditions.
‘There is still a portion of homeowners who are in severe mortgage stress doing it tough,’ he said.
‘It's soul-crushing when you think relief is coming only to find that you need to wait another couple months. Cut or not, there is still a significant difference between the average and lowest rate available.’
Meanwhile, finance editor Chris Kohler said the RBA’s decision had caught even seasoned economists off guard.
‘We're expecting these tight monetary policy conditions to be eased now that we've vanquished, essentially, this inflation demon that we've been battling,’ Kohler said.
‘Now, not only were the big economists expecting today to be an interest rate cut, but they were expecting multiple rate cuts for the rest of this year, anywhere between one and three more on top of today. So now they're really going to have to go back to the drawing board and decide what is Michele Bullock's game plan here, what are we doing?’
For now, the RBA has chosen patience. Whether that patience pays off—or leaves borrowers continuing to shoulder the weight—will be clearer by the time the next board meeting rolls around.
If you’re trying to make sense of how the RBA’s decisions trickle down to everyday finances, check out this illuminating story that breaks down the expected mortgage relief ahead of the rate cut.
It unpacks what the experts are forecasting—and what those figures might mean for your own repayments.
Read more: It’s ‘all but certain’: Why some economists believe relief is finally coming for your mortgage
With so many households hanging on for financial relief, each RBA decision feels like another waiting game—especially for those on fixed incomes or managing tight budgets.
Have you felt the impact of these rate decisions on your day-to-day living costs?
