Reserve Bank of Australia to keep key interest rate at 4.35% for rest of year

BENGALURU, Aug 6 (Reuters) - The Reserve Bank of Australia will keep its policy rate unchanged on Tuesday and for the rest of 2026 as policymakers assess how hikes earlier this year are affecting the economy, a Reuters poll found.

Since February, the RBA has raised the cash rate by 75 basis points to 4.35%, fully reversing last year's easing to try and contain price pressures building even before the U.S.-Israeli war with Iran pushed oil prices significantly higher.

But inflation has eased as higher borrowing costs slow economic activity and oil prices fell sharply in June.

Annual inflation, at 4.0% last quarter, remains well above the RBA's 2%-3% target range but while the core measure rose to 3.6% it was below both the central bank's and economists' expectations.

Many economists say underlying price momentum is easing, giving policymakers reason to remain in wait-and-see mode.