The market narrative centered on the ASX 200 after the RBA decision, with traders parsing a cautious policy outlook for inflation and growth.

Bullock highlighted concerns about domestic inflation drivers such as unit labor costs and weak productivity, keeping inflation persistence a focus.

Policy uncertainty included potential extensions of power price relief by the government, which could influence inflation dynamics.

Near-term catalysts cited include PMI data, trade figures, NAB and Amcor results, and U.S. tariff-related headlines that could steer equities.

Mortgage spreads may have limited room to fall and could widen if banks seek higher profitability, suggesting constrained scope for further variable-rate reductions.

Markets eyed one more rate cut in 2026, but Bullock warned not to over-commit to that trajectory, signaling a cautious path ahead.

The Reserve Bank of Australia kept the official cash rate at 3.60% for a second straight meeting, signaling a cautious stance on future rate cuts amid higher-than-expected inflation.

Australian shares declined as the ASX 200 fell about 0.9% to 8,813.7 and the All Ordinaries slipped to 9,098.2, after an intraday spike on the rate decision before selling resumed.

Governor Michele Bullock signaled a shift toward anchoring inflation at target, with unemployment seen easing gradually to the mid-4% range.

Analysts forecast a difficult 18 months for households, especially mortgage holders, as wages struggle to keep pace with rising prices.

Global and domestic data showed divergent inflation and growth signals, with mixed U.S. and European indicators shaping risk and policy expectations.

Markets showed a pattern of weaker equities, higher yields, and downside risk, with chart patterns suggesting technical resistance around the high-8,700s.