July 2025: RBA rate decision revealed

The Reserve Bank of Australia has kept the cash rate on hold at 3.85 per cent, likely driven at least in part by the need for caution as President Trump’s 90-day pause on “Liberation Day” tariffs expires tomorrow. 

With inflation now at 2.1 per cent and trimmed mean at 2.4 per cent, the RBA appears comfortable that price pressures are under control, but global uncertainty has stayed their hand.

The timing of today’s decision – just one day before Trump’s tariff pause expires – highlights the delicate balancing act facing the RBA. While Australia’s economic fundamentals remain sound with unemployment steady at 4.1 per cent and GDP growth of 0.2 per cent in the March quarter, the potential for significant trade disruption has created a wait-and-see approach.

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Michele Bullock, Governor, Reserve Bank of Australia. RBA’s decision to wait suggests they want to see how global trade tensions play out, experts say.

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Trump tariff deadline creates uncertainty

Tomorrow’s expiry of Trump’s tariff pause creates significant uncertainty for global trade flows. While Australia is not a major US trading partner, the potential impact on China – our largest trading partner – could flow through to Australian economic growth and employment.

The RBA’s decision to wait suggests they want to see how global trade tensions play out before providing additional stimulus. With further cuts still expected this year, today’s hold may prove to be simply a tactical pause rather than a fundamental shift in monetary policy direction.

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Housing market momentum continues despite rate pause

The decision to hold rates comes as Australia’s housing market demonstrates remarkable momentum, with every major market now accelerating. Perth’s extraordinary 1.3 per cent monthly growth suggests the market is again building significant steam, while Melbourne and Sydney are showing renewed vigour with 0.5 per cent monthly growth.

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Prices nationally having risen to a median of $941,000 and units to $695,000.

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With house prices nationally having risen to a median of $941,000 and units to $695,000, the current growth trajectory of 7.0 per cent annually for houses and 5.2 per cent for units appears sustainable despite today’s hold. Markets are still pricing in three rate cuts before year’s end, which means today’s pause may simply be a temporary reprieve rather than a change in direction.