The Reserve Bank of Australia held its cash rate target steady at 3.85% in July 2025, pausing after two earlier cuts as it waits for more confirmation that inflation is sustainably heading to target.

• Headline and trimmed mean inflation were at or near the 2–3% target range in Q1, but recent CPI data were “slightly stronger than expected.”
• The RBA noted progress in domestic demand, real household incomes, and easing financial stress, but flagged risks from weak productivity and unit labor cost pressures.
• Labour market conditions remain tight, with low underutilisation and continued hiring constraints, though wage growth has softened from peak levels.
• Global uncertainty remains high due to unresolved US trade policy and possible delays in business and consumer spending.
• The vote to hold rates was split (6 in favor, 3 against), and the RBA reaffirmed its data-dependent stance, prepared to respond if inflation or growth diverge materially from expectations.