The Reserve Bank of Australia held its cash rate steady at 3.85% during its July meeting, defying market forecasts for a 25bps cut. The move was passed by majority vote, with six members in favor and three against. The central bank cited a more balanced outlook for inflation risks and strength in the labor market as key reasons for maintaining current policy. However, the board remains cautious about the outlook amid uncertainty surrounding both aggregate demand and supply. Policymakers indicated they would wait for more data to confirm that inflation is on track to sustainably return to the 2-1/2% target. They also emphasized that monetary policy remains well-positioned to respond decisively should global developments significantly impact domestic activity or inflation. The RBA stressed it will stay attentive to incoming data and shifting risk assessments, closely monitoring global and financial conditions, domestic demand trends, and the outlook for inflation and the labour market.