UOB economist Lee Sue Ann anticipates that the Reserve Bank of Australia (RBA) will keep its cash rate steady at 4.35% in June, citing softer headline inflation, a cooling labour market, and stagnant wages as key factors reducing the urgency for further monetary tightening [1]. Despite these developments, core inflation remains elevated, prompting the RBA to maintain a tightening bias and signal that additional rate hikes are possible if underlying inflation or inflation expectations do not ease [1].
The economist notes that the policy trade-off for the RBA has become more balanced, supporting a wait-and-see approach as the central bank monitors second-quarter inflation data, labour market trends, and household demand before making any further policy decisions [1]. After three rate increases earlier this year, UOB believes that monetary policy is already sufficiently restrictive, justifying the current pause [1].
No immediate market reaction or analyst opinions beyond UOB's forecast are discussed in the article. The outlook suggests that the RBA is likely to keep rates unchanged through at least the first quarter of 2027, barring any significant changes in inflation or economic conditions [1].
CONCLUSION
The Reserve Bank of Australia is expected to keep its cash rate on hold at 4.35%, reflecting a more balanced policy stance amid softer inflation and a cooling labour market. While the RBA retains a tightening bias, further rate hikes appear unlikely in the near term unless inflation pressures re-emerge. Markets should anticipate a prolonged period of steady rates as the central bank assesses incoming economic data.