Key points

• The RBA surprises by holding the cash rate at 3.85%
• The RBA’s interpretation of the recent data flow is similar to our own, but amid elevated uncertainty they have opted for caution: more gradualism but less predictability
• The RBA is “looking for confirmation we are still on the path” but this is a “decision on timing but not direction”
• We still see the need for the RBA to normalise rates, with consumption so far having recovered more slowly than earlier expected and amid global downside risks
• NAB continues to expect cuts in August and November and have added a cut in February.

For further details, please see the NAB Monetary Policy Update (8 July 2025)