RBA Cash Rate Held AT 4.35%

Why Did The RBA Hold The Cash Rate In August 2026?

At its August meeting, the Reserve Bank of Australia left the cash rate unchanged at 4.35%, after increasing rates three times earlier this year.

The Board said monetary policy is now somewhat restrictive and the economy appears to be slowing as expected. However, inflation remains too high and there are still risks that price pressures could stay elevated for longer.

Here are the main reasons behind the decision.

• Inflation remains too high. Inflation picked up materially in the second half of 2025, with the RBA saying some of that increase reflected greater capacity pressures in the economy. Headline inflation remains elevated and trimmed mean inflation has changed little since the March quarter.
• Higher fuel and energy costs are still adding pressure. Oil and related commodity prices remain above the levels seen before the Middle East conflict. Some businesses facing higher costs are already increasing prices, while others are considering doing so.
• Three rate rises are starting to slow the economy. Higher interest rates have tightened financial conditions. Consumer spending growth is slowing gradually, housing prices are falling in some capital cities and new housing lending has declined noticeably.
• The labour market has softened more than expected. Labour market conditions have eased somewhat faster than the RBA anticipated in recent months, although leading indicators suggest only limited further easing in the near term.
• The outlook remains uncertain. The RBA continues to see risks from the Middle East conflict, global energy prices, weak Australian productivity and broader international economic conditions.

The Board ultimately decided to hold rates while it assesses how the economy responds to the three increases already delivered this year.

However, the RBA has made it clear that a hold does not mean further rate rises are off the table.

Inflation is not expected to return to around the midpoint of the RBA’s 2%–3% target range until late 2027, and the Board said it is prepared to increase the cash rate again if upside inflation risks materialise.

Our Experts Take On The Board's Decision

Here is what our experts say about the cash rate decision and what it means for borrowers.

If you’re waiting for the RBA to cut interest rates before you start looking, remember you aren’t the only one. Once inflation stabilises and rates eventually fall, borrowing capacity goes up across the board. That will bring a lot of other buyers back into the market, increasing competition. Plus, with owner-occupiers getting help from 5% Government Scheme and Help to Buy Scheme, competition will pick up once rates drop. Buying while the market is quiet often means facing far less competition.

Sid Bajracharya, Mortgage Broker

People can consider fixing their loan if they want certainty around their repayments and believe that the long term rates will rise. At this moment, most clients however are leaning toward variable rate loans, with the view that over the long term, interest rates will continue to moderate. People should consider building a cash buffer potentially if they don’t have one in place.

Jonathan Preston, Mortgage Broker

What A Hold Means For Your Repayments

With the cash rate steady, variable repayments should hold where they are this month. But lenders set their own rates and can move independently of the RBA, so it is worth checking your current rate against what else is on the market. If you are already on a competitive rate, a pause is a good window to get ahead while costs are stable.

5 Things To Do After A RBA Cash Rate Hold

• 1. Review your current home loan rate. A cash-rate hold does not automatically mean your existing rate is competitive. If your financial position has improved, you may have better options available.
• 2. Build or strengthen your cash buffer. The RBA has not ruled out another increase, so having savings available can help protect your budget if repayments or other household costs rise.
• 3. Recheck your borrowing power if you plan to buy. Lending conditions, interest rates, income and debts can all affect how much you can borrow, while softer prices in some markets may create opportunities.
• 4. Don’t wait for a rate cut simply because rates are on hold. The RBA expects inflation to remain above the midpoint of its target until late 2027 and has said it could raise rates again if inflation risks increase.
• 5. Choose between fixed and variable rates based on your own circumstances. A fixed rate can provide repayment certainty, while a variable rate offers greater flexibility and allows borrowers to benefit if rates eventually fall. A mortgage broker can help you assess the trade-offs.

How The RBA Cash Rate Affects Interest Rates

Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers.

When the RBA raises the cash rate, lenders often increase their variable interest rates. This means your mortgage repayments go up.

When the RBA cuts the cash rate, lenders may lower interest rates. So, your repayments could go down. However, note that not all lenders pass on the full change.

If the cash rate is unchanged, your repayments usually stay the same. However, lenders can still change rates for other reasons.

Use our rate change calculator to find out what your repayments should look like whenever the cash rate changes.

Upcoming RBA Monetary Policy Board Meeting Calendar 2026

Source: rba.gov.au