RBA Holds Cash Rate at 4.35% as Inflation Remains Elevated
The Reserve Bank of Australia has left the cash rate unchanged at 4.35% at its 11 August 2026 meeting, following three rate increases earlier this year.
The decision reflects a balancing act between persistently high inflation and growing signs that higher interest rates are slowing the economy.
Inflation remains the RBA’s key concern. Headline inflation is still too high, while trimmed mean inflation remains elevated. Higher global oil and energy prices, partly linked to the ongoing Middle East conflict, are also adding to cost pressures. Some businesses are already passing these higher costs on through increased prices.
At the same time, there are clearer signs that tighter monetary policy is having an impact.
Consumer spending growth is slowing, housing prices have started falling in some capital cities, new housing lending has declined noticeably, and labour market conditions have eased slightly more than expected.
The RBA also noted that financial conditions have tightened significantly following the three cash rate increases this year. Money market rates and government bond yields have risen, while the Australian dollar has strengthened.
Despite these signs of slowing activity, the RBA does not expect inflation to return to around the midpoint of its 2% to 3% target range until late 2027.
Importantly, the Board has not ruled out further rate increases.
It stated that it remains prepared to raise the cash rate again if inflation proves more persistent than expected or if other upside inflation risks emerge.
For borrowers, today’s decision means there is no immediate additional increase in repayments from the RBA. However, the interest rate outlook remains uncertain, and borrowers should not assume that the tightening cycle is finished.
With rates remaining elevated, this is a good time for homeowners and investors to review their existing loans, interest rates and overall lending structure to make sure they remain competitive and appropriate for their circumstances.
Robert Sestan
Park Road Finance
0410 514 887
robert.sestan@parkroadfinance.com.au
parkroadfinance.com.au
General information only. This is not personal lending, legal, tax or financial advice.