Australia's Reserve Bank (RBA) has kept its official cash rate unchanged at 4.35%, following three consecutive rate hikes earlier in 2026, but warned it remains prepared to raise borrowing costs further if needed to bring inflation under control. The RBA's board cited persistently high inflation — partly driven by surging fuel prices linked to conflict in the Middle East — and said economic activity must slow further to ease price pressures, even as GDP growth fell to just 0.3% in the March quarter and unemployment climbed to 4.5%. The decision offers limited relief to Australian mortgage holders already under strain, with economists divided on whether rates have peaked or whether further hikes remain likely before cuts begin.