Reserve Bank of Australia Stuns Markets, Holds Cash Rate Steady at 3.85%

In a move that defied widespread expectations, the Reserve Bank of Australia (RBA) announced on July 8, 2025, its decision to maintain the official cash rate at 3.85%. This decision followed a two-day policy meeting and resulted in a rare split vote among RBA board members, with six supporting the hold and three advocating for a cut.

The RBA's decision was influenced by recent data indicating that core inflation had slowed into the central bank's target range of 2% to 3%, and amid weaker-than-expected consumer spending and global economic uncertainty due to U.S. tariffs. Despite these factors, the majority of the board opted to wait for additional confirmation that inflation pressures were easing before adjusting policy.

The Australian dollar responded positively to the announcement, appreciating by 0.8% against the U.S. dollar. Financial markets, which had largely anticipated a rate cut, adjusted their expectations accordingly.

This unexpected move reflects the RBA's cautious approach in navigating uncertain economic conditions. The central bank emphasized the need for more data to confirm that inflation is on track to sustainably return to the 2.5% target.

For further details, refer to the RBA's official statement and analyses by reputable financial news outlets.