The RBA board split on the decision, with six members voting to hold rates steady and three supporting a cut, according to a record of votes released for the first time1. Governor Michele Bullock's board cited the need for additional economic data before proceeding with further cuts.

"The board continues to judge that the risks to inflation have become more balanced and the labour market remains strong," the RBA stated2. "Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply."

The decision comes despite encouraging inflation data showing headline inflation fell to 2.1 percent in May from 2.4 percent in April, according to the Australian Bureau of Statistics3. The RBA's preferred measure, trimmed mean inflation, dropped to 2.4 percent - a three-and-a-half-year low3.

The RBA's caution reflects broader economic uncertainties, including volatile global trade policies and geopolitical tensions. The decision comes just one day before US President Donald Trump's July 9 tariff deadline, though Commonwealth Bank chief economist Luke Yeaman noted Australia has been "very well insulated from the broader shocks" to date1.

Major banks had shifted their forecasts to expect a July cut in recent weeks. ANZ moved its rate call from August to July days before the meeting, while Commonwealth Bank and others cited stalled consumer confidence and trade policy uncertainty as supporting factors for easing2.

Australia's unemployment rate has held steady at around 4.1 percent for nearly a year, stronger than the RBA's previous assumptions1. The central bank had maintained its 4.35 percent rate for 15 months before beginning cuts in February 20252.

The RBA board will next meet in August, with money markets now reassessing the likelihood of future rate cuts. The central bank emphasized it would "wait for a little more information to confirm that inflation remains on track to reach 2.5 percent on a sustainable basis"1.