The Reserve Bank of Australia unexpectedly kept interest rates unchanged, waiting for more inflation data.

The Reserve Bank of Australia kept its policy interest rate unchanged at 3.85% on Tuesday, stating that it needed more time to assess inflation data. Economists had previously expected the rate to be cut by 25 basis points to 3.6%. The Reserve Bank of Australia stated in its Tuesday announcement that it is waiting for "more information to confirm that the inflation rate will continue to reach 2.5% on a sustainable basis." The Reserve Bank of Australia added, "While recent monthly consumer price index (CPI) data suggest that the quarterly inflation rate for June may be broadly in line with expectations, it is slightly higher than expected." Australia's inflation rate for May was lower than expected at 2.1%, the lowest level since October 2024. The first-quarter inflation rate was 2.4%, remaining at its lowest level in four years. Following the announcement of the interest rate decision by the Reserve Bank of Australia, Australian Treasurer Jim Chalmers stated that the move was "not the outcome that millions of Australians had hoped for, nor was it the outcome expected by markets or economists." He added that Australia has made "substantial and sustained progress" in controlling inflation and praised the government's efforts to reduce the cost of living. Shortly after the interest rate decision was announced, the S&P/ASX 200 index fell by 0.24%, while the Australian dollar rose by 0.79%. Australia is currently facing economic growth slowdown due to reductions in public spending, weakened consumer demand, and exports. In the first quarter of this year, Australia's economic growth was 1.3%, lower than the market's expected 1.5%.