Australia’s central bank has decided to hold interest rates steady, a move that economists saw coming. On Tuesday, the Reserve Bank of Australia (RBA) kept the cash rate at 3.6 percent after a unanimous vote from its Monetary Policy Board.
This comes after the bank cut rates three times earlier in 2025, bringing them down from 4.35 percent at the start of the year. The RBA pointed to ongoing uncertainties in Australia’s economy and inflation, driven by both local issues and global events.
Inflation stayed within the bank’s target range of 2 to 3 percent during the second quarter of 2025. But the board warned that third-quarter figures could come in higher than expected. In its statement, the RBA highlighted elevated global economic risks, including clearer but still challenging U.S. tariffs and responses from other nations. While extreme scenarios seem less likely now, trade policies could still slow global growth, and geopolitical tensions pose ongoing threats.
The board plans to review the cash rate again in early November, keeping a close eye on these developments.
In other economic news, Australia’s government unveiled its final budget results for the 2024-25 financial year on Monday, showing a smaller-than-expected deficit. The overall shortfall hit about 18 billion Australian dollars, or roughly 11.8 billion U.S. dollars—better than earlier projections.
Treasurer Jim Chalmers and Finance Minister Katy Gallagher announced an underlying cash deficit of just under 10 billion Australian dollars, which equals 0.4 percent of gross domestic product (GDP) as of June 30.
Earlier forecasts had painted a gloomier picture: the Pre-election Economic and Fiscal Outlook (PEFO) from earlier this year predicted a 27.9 billion Australian dollar deficit, while the 2022 version expected 47.1 billion. Chalmers and Gallagher celebrated the progress in a joint statement, noting that outcomes under the Labor government have improved by a combined 209 billion Australian dollars since they took power in 2022.
“In dollar terms, we’ve made more progress on the budget in three years than any government in history,” they said. This positive shift offers some relief amid broader concerns about the Australian economy and global pressures.
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