The Monetary Policy Board of the Reserve Bank of Australia (RBA) has announced that it will hold the official cash rate steady at its current level of 4.35 per cent.
The decision, announced on Tuesday afternoon (16 June), was broadly forecast by major bank economists and financial markets, and pauses the current tightening cycle, which first began in February 2026.
The central bank’s decision to maintain the cash rate at its current setting suggests it is prioritising a wait-and-see approach to ensure inflationary pressures are sustained and to assess the economic impacts of the three consecutive cash rate hikes between February and May.
The decision will provide temporary relief for Australia’s 3.8 million mortgagors, with Australian households already facing mounting financial strain.
The policy decision was unanimous within the RBA board.
What was said at the RBA board meeting?
In its post meeting statement, the board said that it remained “focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through.”
“To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target. Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected.
“But inflation is still too high and the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.
Where may rates go from here?
Financial markets were correct when pricing in a 0% expectation of an interest rate change for the June cash rate.
The decision marks the first rate pause of 2026, following three consecutive 25-basis-point hikes in February, March and May.
Several economists have suggested that the central bank may now move to an extended ‘hold’ period, driven by weakening economic momentum (Australia’s Gross Domestic Product grew by just 0.3 per cent quarter-on-quarter in Q1) and emerging slack in the labour market (the national jobless rate increased from 4.3 to 4.5 per in April).
Evaporating consumer and business confidence, plummeting expectations, and stabilising geopolitical and global tensions have also been listed as key factors for the RBA pumping the brakes.
However, the RBA is also grappling with persistent pressures, with trimmed mean inflation (the RBA’s preferred gauge) ticking upward from 3.3 to 3.4 per cent in April, well above the central bank’s target band of 2-3 per cent.
How can you pay off your home loan sooner or reduce your monthly repayments?
Your home loan payments are a significant slice of your household budget.
Our lending specialists not only offer you a free home loan review to potentially help you unlock savings on your home loan, we also will complete a full budget review with you, looking at all your personal debts – and business debts to if applicable.
This may help you consolidate debt to lower your monthly repayments or help you unlock equity to pay down high interest debt.
A free phone or web-based review of your home loan can take 5 minutes. With a fast application process like the LJ Hooker Home Loans Express REFI product you can potentially refinance within 7 days.
If you’re keen to switch and save, or just have a free home loan review, get in touch with one of our local specialists today. We can also offer free property market info to help with your equity assessment.
We know loans like we know homes.
We hope you found this article helpful. If you’d like to discuss it further please fill in the form below and we’ll be in touch.
"*" indicates required fields
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.