Reserve Bank of Australia expected to keep cash rate unchanged

Economists predict the Reserve Bank of Australia (RBA) will hold the official cash rate at 4.35% at its June meeting, marking the first pause since early 2026. The forecast reflects continued inflation above the 2‑3% target band and uncertainty stemming from the Middle East conflict, which could affect Australian markets.

Westpac economists Luci Ellis and Neha Sharma said mixed inflation and labour data support a pause, while Commonwealth Bank’s Belinda Allen noted the need to monitor price pass‑through from the conflict. The RBA’s decision follows recent budget measures that limit negative gearing for new homes and replace a 50% capital‑gains‑tax discount with an inflation‑linked rate. Assistant governor Brad Jones is expected to elaborate on the rationale at an Australian Banking Association conference.

Australian share futures rose sharply on the news, with the S&P/ASX200 gaining nearly 2%, while U.S. markets also moved higher after a drop in oil prices and the debut of SpaceX shares.