Overview

• The Reserve Bank left its official cash rate unchanged at 3.85% on July 8, surprising markets that had fully priced in a 25 basis point cut.
• Six members of the board argued for a pause to confirm inflation remains on track to reach 2.5%, while three supported an immediate easing move.
• Governor Michele Bullock’s statement shifted the guidance to balance inflation targets with full employment considerations.
• The surprise hold lifted the Australian dollar and postponed the extra mortgage relief that borrowers had expected.
• Heightened global trade risks, including US tariff threats, and a tight labour market underpinned the bank’s cautious approach.