RBA Expected to Hold Interest Rates Amid Cooling Economy and Easing Geopolitical Tensions

The Reserve Bank board will deliver its June interest rate decision at 2:30pm AEST.

That will be followed by a press conference from RBA governor Michele Bullock at 3:30pm.

We will have full coverage, market reaction and analysis here on the blog, so stick with us.

Economist Zac Gross has a great site that provides forecasts of likely interest rates moves derived from the ASX futures market.

Here's what it looks like today.

You'll see the likelihood has changed over time: the sharp movements have been inflation and unemployment data releases that have appeared to make something more or less likely.

Important to note: the futures market has been wrong-footed by an RBA decision. This just tracks the likelihood based on positions people have taken.

Last year there was a '97% certainty' of a rate cut and it didn't happen.

A few minutes into the session and Australian shares have indeed headed south as futures trade indicated, despite the gains on Wall Street.

The ASX 200 is down 0.8%.

I think rates should go to 5% with the aim of hitting 7% by 2027 and then flat lining at that 7%for five years to give stability and certainty for a block of time

- Jim stuht

Hi Jim, I know the Reserve Bank wants to tame inflation, but I'm not sure they want to trigger an Australian economic depression and deflation!

Before the Tuesday session kicks off on the ASX, take a look back at how we got here with Alan Kohler's finance report.

The share market rose on Monday, and the price of oil dropped after the announcement of a ceasefire agreement between the US and Iran.

As Alan notes, Donald Trump has been the president who has cried deal, with oil prices reacting each time, but this seems to have been closer to the real deal.

Popular burger chain Grill’d is being sued by the consumer watchdog over allegations of greenwashing.

The ACCC has taken Grill'd to the Federal Court, claiming it misled customers over environmental donations.

The food chain ran a promotional campaign called Tree Day Tuesday, where customers were told it would donate $1 from every eligible burger towards tree planting.

Almost 5 million burgers were sold over three years but only a small percentage qualified for the donations because of detailed conditions which weren't fully disclosed, the ACCC alleges.

Grill'd has been contacted for comment.

Ahead of this afternoon's interest rates decision, the RBA is widely forecast to keep rates on hold at 4.35%.

AMP deputy chief economist Diana Mousina joined ABC News Channel this morning and said the RBA did not need to "rush and raise rates again".

"Three consecutive rate rises is quite a fast tightening pace.

"So we've seen mortgage rates increase and there's going to be more down the track because, of course, there's a bit of a lag in terms of when the Reserve Bank lifts interest rates and when it's passed through to mortgage holders and how consumers change their spending behaviour," Ms Mousina said.

"The main reason that they've been tightening this year has been because the inflation figures in Australia have been much higher than they were forecasting just a few months ago, and, of course, the increase to oil prices doesn't help the already high inflation backdrop that we've had.

"In the past weeks, we've had some mixed data, I'd say, numbers that haven't looked as strong. So I guess the Reserve Bank may be wanting to watch and see how the data performs in the next few months before making their decision on whether to raise rates again later this year."

Despite the central bank perhaps having room to pause, Ms Mousina said that did not mean it was happy with inflation at current levels.

"It's definitely not comfortable with where inflation is at at the moment. Inflation is still way too high … we are well above that target range, and I guess that makes me think we're still likely to get another rate rise down the track, because we are well away from our inflation goals."

It's been a month since the federal budget revealed a major tax overhaul, but the proposed capital gains changes remain in the headlines.

Today is the second day of a short parliamentary inquiry into the CGT and negative gearing changes.

Canberra-based economics reporter Tom Crowley has been following the hearings, and said yesterday's saw qualified support from a handful of economists, but condemnation from business groups.

Labor's proposal has some design flaws but is better than the current system, according to leading economists who appeared on Monday.

The first day of hearings was shaped by warring contributions from elated progressive groups who argued the tax package would improve generational fairness, and furious business groups who warned that it would chill investment.

The government is considering limited carve-outs, including for startups.

Read the full wrap-up:

In case you missed it yesterday afternoon, the Department of Finance has confirmed that embattled accounting firm KPMG will not bid for any new Commonwealth work until the end of September.

"Between 16 June and 30 September 2026 KPMG will temporarily cease new contract engagements with Australian Government entities subject to the Commonwealth Procurement Rules (CPR), with non-CPR covered entities recommended to adopt a consistent approach," a spokesperson said.

"During this timeframe, Finance will commission an independent review of KPMG's governance, culture, ethics and integrity frameworks. Further details regarding the review will be made available in due course."

KPMG is engulfed in a scandal that has seen several senior leaders quit their roles and the corporate watchdog launch a formal investigation into the firm's business dealings.

The fallout follows an internal whistleblower's allegations that some of the firm's senior partners misused confidential client documents.

We'll learn more later this week when more than 30 witnesses are called before a parliamentary inquiry.

HSBC Australia's chief economist Paul Bloxham says he believes a downturn is needed to slow the economy, but a recession isn't his central case.

Speaking to Kirsten Aiken on The Business last night, Mr Bloxham said the ceasefire development in the Middle East should take some pressure off the RBA, but an inflation challenge remains.

"We have to be really cautious that this is one step in a process, that [the Strait of Hormuz] is going to take time to reopen, that a lot of disruption that's happened … there's a whole collection of stories that have to play out yet," he said.

"But I think the RBA will look at this certainly as positive news that we're heading towards some semblance of normal."

Watch the full interview:

In the wake of the US-Iran ceasefire agreement, US markets are in the green.

Senior market analyst Daniela Hathorn from capital.com says the positive and quick reaction by investors is to "unwind some of the risk premium that had built up", particularly across energy markets this year.

"The most immediate impact has been seen in oil, where prices have fallen sharply on expectations that the Strait of Hormuz will remain open and that the risk of a prolonged supply disruption has diminished," she says.

"Equity markets have responded favourably, particularly in Europe and Asia, which are more exposed to energy imports and had been more sensitive to the inflationary consequences of higher oil prices."

Ms Hathorn says it could impact decisions by the US central bank, as the Federal Reserve meets this week under new chair Kevin Warsh.

"Prior to the deal, investors had become increasingly concerned that higher energy costs would feed into broader inflation pressures and potentially force policymakers into additional tightening," she says.

"The sharp decline in oil prices does not eliminate inflation risks altogether, but it does reduce some of the urgency surrounding them."

Ms Hathorn says the peace agreement may give the Fed "greater flexibility to maintain a neutral stance" rather than further tightening.

"However, policymakers are still likely to remain cautious. While the energy shock may be easing, underlying inflation pressures tied to strong economic activity and AI-related investment remain present," she says.

"After weeks dominated by geopolitical developments, attention is now shifting back toward monetary policy, and Warsh's first press conference may be the most important market event of the week."

The RBA board members will be feeling a double-sized dose of relief today when they meet to thrash out our future interest rate movements, writes chief business correspondent Ian Verrender.

Within the space of a few weeks, the picture has changed dramatically.

The pressure to keep pushing rates ever higher has suddenly dissipated. There's a near-universal consensus that rates will remain on hold this year, with possible cuts next year.

The economy is cooling, with inflation showing signs of moderating, unemployment rising and growth all but stagnating.

But two key factors have also emerged that have given the RBA some breathing space.

The property market is in retreat in the two biggest capitals, and price gains are slowing elsewhere.

And now this.

Donald Trump's all-out attempt to put an end to his ill-fated war with Iran has finally yielded a result, and just in the nick of time.

Read the full analysis:

There were big numbers on Wall Street as US markets finished up Monday trading.

It followed a similar pattern to the ASX 200 yesterday, as both markets reacted to the news of a possible ceasefire agreement between the US and Iran.

The S & P 500 finished the day up +1.7% to 7,554 points, with the Technology sector leading the way.

Here are the top movers, with data storage company Western Digital up +16%, miles ahead of DoorDash Inc, which also had massive gains of +11.6%.

Here are the bottom movers:

The Dow Jones Industrial Average finished up +0.9% to 51,671 points, with Consumer Cyclicals leading the charge.

Here are the top movers, with Boeing up +4.5%.

And here are the bottom movers, with Chevron Corp down -3.6%.

Finally, the Nasdaq 100 finished the day up +3.1% to 30,544 points, with the Tech sector up +3.4%.

As for the top movers, Western Digital again lead the way with massive gains.

As for the bottom movers, the transport company Old Dominion Freight Line was down the bottom, down -3.4%.

Elon Musk's SpaceX also continued to climb. Here is a look at the stock's movement for Monday:

ASX futures: -1.1% to 8,827 points

Australian dollar: flat at 70.68 US cents

Wall Street: S & P 500 +1.7%, Dow +0.9%, Nasdaq +3.1%

Europe: Dax +1.1%, FTSE -0.4%, Eurostoxx +0.1%

Spot gold: +2.1% to $US4,305/ounce

Oil: Brent futures -4.2% to $US83.63/barrel, WTI futures -4.2% to $U81.31/barrel

Iron ore: flat at $US101.30/tonne

Bitcoin: -0.2% at $US66,366

Prices current at around 7:45am AEST

Live updates on the major ASX indices:

The Reserve Bank lifted interest rates in February, March and May, so every meeting of the year thus far.

Today, expectations are overwhelmingly for rates to remain on hold.

And since the last RBA meeting, forecasts have shifted towards the central bank leaving rates on hold for the foreseeable future, and some prominent economists now tipping the next move to be down.

Whether you have a mortgage, are renting, saving, hoping to buy, living on retirement income, or just trying to manage the cost of living, we'd like to hear from you.

How will you feel today if interest rates remain on hold?

Join the conversation by leaving a comment above.

Potentially some bad news for real estate agents and those in a rush to sell a property.

Data from Cotality shows final auction clearance rates dropped to about 43% at the first weekend after the May 12 budget.

Zooming out, capital city sales fell almost 17% from May 2025 to May 2026, as cities across the country see a cooling in the value of house prices, and in some cases, like Sydney and Melbourne, a decline in value.

Interest rate hikes, geopolitical uncertainty, and federal budget announcements have created the perfect storm for these numbers.

You can read the full piece from Hanan Dervisevic below: