RBA rate cut live updates: Reserve Bank of Australia reveals shock move to keep interest rates on hold

Reserve Bank Governor Michele Bullock shocked the market at 2.30pm by keeping rates on hold while many were expecting cuts.

She cites inflation as a key factor and said while given there has been two quarters of inflation in the target band so far but the bank needs more information before going again,

“However, some components suggest underlying inflation in the June quarter could be a little higher than our forecast. Wages growth has eased over the past year, but growth in Unit labour costs remains elevated, alongside continued weak productivity growth.

“By our next meeting in five weeks, we will have the June quarter CPI, another labour market reading, further information about international developments and an updated set of forecasts. So the board decided to wait a few weeks to confirm that we’re still on track to meet our inflation and employment objectives,” Ms Bullock said.

We’ll bring you all the latest as it happens.

The Treasurer has been asked about the impact on Trump’s new tariffs on the RBA’s decision and said it will be the ‘defining influences on our economy’.

“You can see in the Reserve Bank statement that the global uncertainty is really one of the defining influences on our economy at the moment, and I think it will be the main thing that shapes our choices as a government in this second term.

“The international environment is very unpredictable, very volatile, and the Reserve Bank Board has put that view in the statement pretty clearly,” Dr Chalmers said.

“Our job is to make our economy more resilient in the face of that uncertainty, make our economy more productive, and also try and make our budget more sustainable.

“And these are really the three goals behind the reform process that we kicked off at the start of this second term, because that global environment is going to constrain us. It’s going to shape our choices. It’s going to be such an important influence, and it’s an important influence on monetary policy as well.”

Dr Chalmers has said the decision to keep rates on hold is a suprise to mortgage holders and the nation’s economists.

“I acknowledge that there will be millions of Australians around the country who were desperately hoping for more rate relief today, in addition to the two rate cuts that we’ve already seen over the last five months,” he said.

“I think I’ve been upfront in saying that this will come. This decision has come as a surprise to the market and to almost every economist who’s expressed a view in recent days and weeks.”

The RBA has published the votes of the Board for the first time and Dr Chalmers has “welcomed the transparency”. As part of the RBA review, greater transparency was called for. The Board voted 6 to 3 to keep rates on hold.

“I think that transparency is a welcome change, and I’m grateful to the Reserve Bank, and particularly to the Governor of the Reserve Bank, for the role that she has played in making sure that those decisions are more transparent.”

A reporter is asking whether the board members who voted for a hold or cuts should be published.

The Treasurer believes it is best the votes stay anonymous.

“I think this strikes the right balance. It’s a good thing to have people around the table that will tease out and contest the views. We want these to be decisions which are taken after a lot of deliberation and debate.

“And I think the fact that the Reserve Bank Board was split on this occasion that there wasn’t a unanimous view is a signal that these decisions are deliberated and debated on properly and that’s a good thing.”

Jim Chalmers is holding a press conference to discuss the unexpected decision by the RBA to keep rates on hold at 3.85 per cent.

He’s talking up the falling inflation and suggesting that that helped the RBA feel comfortable cutting rates.

“It’s clear now the direction of travel, and the Board has decided to wait for more information about in order to inform future decisions about interest rates,” Dr Chalmers said.

“We have made a lot of progress together on inflation and the Reserve Bank Statement recognises that today.

“We know the job’s not finished, because people are still under pressure, and the global environment is so uncertain. And some of that global uncertainty is also recognised in the Reserve Bank’s statement today.”

The HIA has hit out at the decision, saying it’s a “missed opportunity”.

“This decision will leave new home building activity more constrained than necessary, for longer, but the previous two cuts to the cash rate have seen an improvement in market confidence that is likely to continue,” senior economist Tom Devitt said.

“Recent inflation data shows that the RBA’s preferred trimmed mean measure has been within their 2-3 per cent target band for over a year now, and continues to decline.

“Household spending has also been constrained, with Australia having been in an almost uninterrupted per capita recession since mid-2022.

“This recent data reinforced the market expectation that the RBA would deliver a cut at their July meeting – an expectation that was disappointed today.

“By most of the RBA’s own estimates, the cash rate remains in restrictive territory, meaning it is still constraining household and business spending across the economy, including in the home building industry.”

Compare the Market economic director David Koch says while today’s call may be disappointing, there were still ways they could save - by switching to a better rate.

“There can be a 0.50 per cent difference between some of the advertised rates on Compare the Market’s home loans panel so you can effectively create your own rate cut by shopping around,” Mr Koch said.

“That could represent a saving of $210 on monthly repayments - or $2520 over a year - for someone with an average $660,000 loan.

“And that’s just looking at rates for new customers, which we know are often much more enticing than the rates available to older customers who have not refinanced in a number of years.”

Treasurer Jim Chalmers has issued a statement saying the decision is not the one many Aussie homeowners were hoping for.

“Today the independent Reserve Bank left interest rates on hold at 3.85 per cent,” Dr Chalmers says.

“It’s not the result millions of Australians were hoping for or what the market was expecting.

“We have made substantial and sustained progress on inflation which is why interest rates have already been cut twice in five months this year.

“We’ve seen elsewhere that when central banks cut rates, they don’t always cut at every meeting.

“The RBA has indicated the direction of travel on inflation and interest rates has been established.”

The statement then goes on to say how the Albanese Government is doing a great job managing the economy.

“We recognise that people are still under pressure and there’s more work to do in our economy and that’s why the cost-of-living relief that we’re rolling out right now is so important,” he said.

Essentially, they’re not too happy with where inflation is at.

“The board continues to judge that the risks to inflation have become more balanced and the labour market remains strong,” the board said in a statement.

“Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply.

“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.”