The Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% during its upcoming meeting, as recent inflation data showed mild cooling.

Recent inflation figures have been weaker than anticipated, further decreasing the likelihood of an interest rate increase.

Core inflation slightly decreased to 3.9%, although it remains above the RBA's forecast of 3.8%, raising concerns about future inflation trends.

The current cash rate of 4.35% is the highest in 12 years, contributing to significant mortgage stress for many households.

A couple earning $184,060 could be spending nearly 44% of their before-tax income on mortgage repayments, which could rise to 45% with another rate hike.

With major banks not predicting rate cuts before late 2023 or as late as May 2025, many borrowers are likely to face prolonged financial stress.

The Australian Council of Social Service has urged the RBA to consider cutting interest rates to mitigate risks of rising unemployment and recession.

RBA Governor Michele Bullock has emphasized the need for vigilance against inflation risks that disproportionately affect lower-income individuals.

The unemployment rate increased to 4.1% in June, signaling potential downside risks in the labor market, which may influence the RBA's decision.

Analysts from ANZ predict that the RBA will keep rates unchanged, with rate cuts not expected until February 2025.

The RBA is set to announce its decision on the cash rate at 2.30pm on Tuesday, weighing the options to hike or hold.