The Reserve Bank of Australia (RBA) on Tuesday kept its benchmark interest rate unchanged at 4.35%, in line with market expectations, following signs that inflation has begun to cool. The decision was passed unanimously. The RBA has cumulatively raised interest rates by 75 basis points this year. Expectations for a pause in rate hikes strengthened after Australian consumer price inflation came in lower than expected in the second quarter, and policymakers also lowered their inflation forecasts for the end of 2026. However, the central bank warned that headline and core inflation remain high and are likely to stay high in the short term, noting that rising fuel prices due to the conflict in Iran are a significant source of recent inflationary pressure, which means further rate hikes remain possible in the future.