Australia’s central bank to cut rates in August after unexpected pause in July — Reuters

Investors are revising their forecasts for the Reserve Bank of Australia’s (RBA) monetary policy after the regulator unexpectedly kept interest rates unchanged at its July meeting. Market participants now project a 0.25% rate cut in August. The central bank is likely to take another similar step in the fourth quarter of 2025, Reuters reports.

The RBA’s decision to hold off on reducing borrowing costs in July did not catch all experts off guard. For instance, Craig Vardy of BlackRock had warned that consecutive cuts in July and August would have been excessive. However, the current pause does not negate policymakers’ overall dovish stance, Vardy emphasizes.

Since the beginning of the year, Australia’s central bank has cut borrowing costs twice—in February and May—each time by 25 basis points. In April and July, the regulator refrained from making any changes. Market participants now anticipate two more rate cuts from the RBA. The first is likely to take place in August and the second closer to the end of the year, according to Reuters.