The Reserve Bank of Australia (RBA) surprised financial markets on Tuesday by maintaining its benchmark interest rate at 3.85%, defying broad expectations for a 25 basis point reduction.
The central bank concluded its two-day policy meeting with a rare split vote: six board members favored keeping rates unchanged, while three supported a cut. Policymakers cited the need for further data to confirm a sustained slowdown in inflation.
Investors had largely anticipated a move to 3.60% after core inflation dropped into the RBA’s target range of 2% to 3% and domestic consumer spending softened more than expected.
Ongoing uncertainty from new U.S. tariffs had also fueled speculation that a rate cut might be used as a safeguard against potential global economic headwinds.
