Divided RBA shocks markets to hold cash rate at 3.85pc

Jonathan Shapiro, John Kehoe and Sarah Jones

Updated Jul 8, 2025 – 3.06pm, first published at 2.54pm

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Reserve Bank of Australia governor Michele Bullock has defied financial markets and the government by holding interest rates steady, saying she wants to be more confident that inflation is under control before cutting again, potentially as soon as next month.

The RBA monetary policy board, for the first time in its history, revealed the vote tally of members, with six voting to hold the cash rate and three wanting an immediate cut. An overwhelming majority of economists had expected the central bank to lower rates, and the shock decision to hold the cash rate at 3.85 per cent was branded a “surprise” and “notable shift”.

Jonathan Shapiro writes about banking and finance, specialising in hedge funds, corporate debt, private equity and investment banking. He is based in Sydney.

John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury.

Sarah Jones is the Financial Review’s markets editor based in the Sydney newsroom. She has covered financial markets, economics and asset management for more than two decades including 12 years for Bloomberg in London.