Reserve Bank of Australia Press conference comparison — 20 May 2025 vs 8 July 2025

This Reserve Bank of Australia press conference comparison covers 20 May 2025 and 8 July 2025. Overall, the newer document was more hawkish. The RBA held rates after a cut, with a hawkish tilt on inflation and risks but confirming an easing path contingent on data. Next decision likely a cut in August if CPI data aligns with forecasts.

What changed

More hawkish. The RBA held rates after a cut, with a hawkish tilt on inflation and risks but confirming an easing path contingent on data. Next decision likely a cut in August if CPI data aligns with forecasts.

Inflation — More hawkish. Inflation assessment shifted from below-target comfort to concerns about upside risks and higher-than-expected components, delaying rate cuts.
Labour Market — More dovish. Labour market language softened from 'tight' to a neutral focus on dual mandate, reducing a key constraint on easing.
Rate Path — Little changed. Rate held after prior cut, but forward guidance confirms easing bias; timing postponed to August pending CPI data.
Balance Sheet — More hawkish. Risk balance shifted from balanced with downside risks to a more cautious assessment, downplaying trade war fears and emphasizing patience.

Key wording

20 May 2025

At its meeting today, the Board decided to lower the cash rate target by 25 basis points to 3.85 per cent.
rate path: 25bp cut signals easing cycle start.

At 2.9 per cent, annual trimmed mean inflation was below 3 per cent for the first time since 2021 and headline inflation, at 2.4 per cent, remained within the target band of 2–3 per cent.
inflation: Inflation within target provides room to ease.

a range of indicators suggest that labour market conditions remain tight.
labour market: Tight labour market limits scope for further easing.

There is a risk that any pick-up in consumption is even slower than this, resulting in continued subdued growth in aggregate demand and a sharper deterioration in the labour market than currently expected.
rate path: Downside risk to growth and labour suggests further cuts possible.

The Board judged that the risks to inflation have become more balanced.
rate path: Shift to balanced risks supports the cut.

It nevertheless remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply.
rate path: Cautious tone tempers dovish action.

8 July 2025

So today the Board decided to leave the cash rate on hold at 3.85 per cent.
rate path: Rate held contrary to market expectations of a cut; signals caution.

Some components suggest that underlying inflation in the June quarter could be a little higher than our forecast.
inflation: Indicates upside risk to inflation, delaying rate cuts.

But the best thing we can do for them is to try and meet our mandates of keeping inflation low and unemployment as low as we can.
labour market: Reinforces dual mandate, but no new policy signal.

The likelihood of a severe downside scenario associated with a trade war which we set out in our May Statement, that likelihood has abated.
rate path: Reduced trade war fears lessen need for pre-emptive easing.

I am a little surprised that that got so much reaction because I thought I said fairly clearly at the press conference that we discussed it briefly in the context ... but we dismissed it fairly quickly and went back to the 25
rate path: Downplays prospects of a larger cut, reinforcing cautious stance.

The Board continues to judge that it is appropriate to maintain a cautious, gradual approach to easing monetary policy.
rate path: Reinforces no near-term cuts; patience emphasized.

Official documents

Background reading

20 May 2025 press conference · 8 July 2025 press conference · Earlier meeting · Later meeting · Methodology