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RBA to Decide on Interest Rates Amid Inflation and Employment Concerns

The Reserve Bank of Australia (RBA) is set to announce its latest interest rate decision next week, with inflation, unemployment, and household spending as key factors influencing the outcome. While major banks expect rates to remain unchanged at 4.35%, experts warn the decision could still involve a hike. Inflation remains above the 2-3% target range, with recent data showing headline inflation slightly easing to 3.8% but trimmed mean inflation staying at 3.6%. Governor Michele Bullock has emphasized that prolonged high inflation risks making it harder to control, as higher fuel and commodity costs impact sectors like housing and construction. The unemployment rate dipped to 4.4% in June, below the 2026 peak of 4.5%, though this alone isn't enough to trigger immediate action. Household spending rose 0.8% month-on-month, but analysts note volatility in the data, making it difficult to gauge household financial stress accurately. Sally Tindall from Canstar advises borrowers not to assume rates will stay the same, urging them to review their finances and consider refinancing options amid uncertainty. The RBA's decision will balance its dual mandates of controlling inflation and supporting employment, with global factors like Middle East conflicts potentially influencing future moves.