Central banks
RBA holds cash rate at 4.35% as Governor Bullock warns inflation remains sticky
The Reserve Bank of Australia kept its official cash rate at 4.35% on Tuesday, with Governor Michele Bullock stating that underlying inflation remains too high to contemplate easing.
Key points
- The Reserve Bank of Australia Policy Board held the cash rate target at 4.35% following its November meeting.
- Governor Michele Bullock noted that trimmed mean inflation of 3.5% remains well above the 2% to 3% target band.
- AUD/USD traded near 0.6580 as the central bank reinforced that future interest rate increases remain possible.
The Reserve Bank of Australia concluded its scheduled two-day monetary policy meeting in Sydney on Tuesday, November 3, voting to maintain the official cash rate target at 4.35 percent, holding borrowing costs at twelve-year highs for an eighth consecutive meeting.
In its post-meeting policy statement, the RBA Board emphasized that while headline consumer price metrics have eased in recent quarters, trimmed mean inflation held stubbornly at 3.5 percent year-on-year in the third quarter, remaining materially above the midpoint of the central bank's two to three percent target range. Policymakers pointed to persistent domestic demand, resilient services sector pricing, and tight skilled labor markets as key barriers to sustainable disinflation.
During her press conference, RBA Governor Michele Bullock struck an overtly hawkish tone, explicitly pushing back against market pricing that had anticipated an interest rate reduction during early 2027. Bullock stated that the Board is not ruling anything in or out and will do whatever is necessary to bring inflation sustainably back to target, warning that volatile global energy prices introduce renewed upside price hazards.
The Australian dollar gained immediate support following the announcement, advancing toward 0.6590 against the US dollar before stabilizing around 0.6580 as broader dollar strength limited upside follow-through. Australian sovereign three-year bond yields climbed six basis points to 4.12 percent, aligning market pricing with the central bank's extended higher-for-longer commitment.
