RBA interest rates decision August 2026: Cash rate held at 4.35 per cent
Today’s decision marks the second consecutive hold of the year following July’s meeting, signalling a tentative sign of stability for Australian homeowners after the first half of 2026 was front loaded with three rate hikes – but the board remains bullish in its message that inflation is still too high.
In a press conference held shortly after the announcement, RBA Governor Michele Bullock said inflation remains too high and that the board “remains concerned” about the inflation outlook.
Bullock says the board expects a period of subdued growth in the economy will be required to “bring inflation down sustainably”.
“We still need to see some further progress before the board can be confident that we are going to get inflation back to target with current monetary policy settings,” Bullock says.
“The board will raise interest rates further if that is what is required to bring inflation down in a timely way.”
While mortgage holders may sleep soundly tonight, today’s announcement is unlikely to accelerate the property market in any significant way that mirrors the momentum we saw earlier in the year, says PRD chief economist Dr Diaswati Mardiasmo.
“Today won’t have like the massive impact that many people are predicting in the sense that suddenly all the buyers are going to come back, and we’re going to start overnight or like within a week, have a revival of the property market, she says.
“It is still going to be a slow-burn in terms of people coming back into the market like they were in late 2025 and early 2026.
“Three cash rate hikes and everything else that’s happened with the federal budget has kind of knocked the wind out of the property market a little bit and so to get that back does take time.”
While holding the cash rate “sends a message of stability”, the road ahead is not as straight cut, Mardiasmo says.
“I think the key message is that we’re able to exhale a little bit with a hold. Not that we’re not alert. Not that we’re not letting our guard down. It just gives us a little bit of that breathing room.”
Inflation currently sits at 3.8 per cent in June, down from 4 per cent in May, and still remains above the RBA’s target range of 2 to 3 per cent.
But it did come in lower than expected, and now all four banks have officially ruled out any more rate hikes this year.
While the RBA remains hawkish in their messaging, some Treasurer Jim Chalmers says today’s news to will bring some reprieve to mortgage holders.
“This will come as a relief to Australians with a mortgage. It is a welcome decision at a time of heightened uncertainty in the world and persistent pressure in our own economy at home as well,” Chalmershe said in a press conference after the announcementsays.
“Now tThis is the second rates decision since the budget and on both occasions we’ve seen rates held steady, and this decision reflects the fact that inflation has been coming in well under the Reserve Bank and the Treasury’s forecast.”
Westpac senior economist Matthew Hassan says rates will stay on hold until next year unless inflation “kicked up” again.
“The further we go towards the end of the year, the more difficult it’s going to be to justify a hike. We know that policy acts with a lag,” he says.
While the big four banks anticipate no rate hikes in the coming months, the RBA is keeping the door ajar and is “prepared to act” if inflation doesn’t reach its target.
“So, they really don’t want … the idea that rates are going to move lower anytime soon.”
The potential succession of multiple holds on the horizon is eerily similar to 2024, when the cash rate remained steady at 4.35 per cent for every scheduled RBA meeting throughout the year, finally resulting in a rate cut in February 2025.
However, while home owners weathered a 4.35 per cent cash rate not so long ago, today’s twin figure in 2026 has grey skies hovering above.
In 2025, three rate cuts saw the cash rate drop to 3.60 per cent, but the RBA’s decision to reverse course with three back-to-back rate hikes in early 2026, along with a war in the Middle East, persistent inflation, a cost of living crisis, and the federal government’s budget announcements, have culminated in consumer sentiment tanking.
The Westpac–Melbourne Institute Consumer Sentiment Index dropped to a decades low of 80.6 points in June 2026, before slightly increasing to 83.9 points in July.
In this month’s Finder RBA Cash Rate Survey, 38 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy. While the majority of panellists (92 per cent) predicted the the cash rate stay stead at 4.35 per cent, 44 per cent of panellists expect there would be at least one more rate rise this year.
“Borrowers will understandably see this hold as another moment to catch their breath, but that relief is likely fleeting,” Taylor Blackburn, personal finance specialist, at Finder says. “With nearly half of our panel expecting another hike this year, now is the right time to act.”
House prices are already slipping in Sydney, Melbourne and Canberra, as per Domain’s House Price Report for the June 2026 quarter, but when compared to the median in these cities at the same time last year, they are much the same. The data is almost identical, but this year buyer and seller confidence has nosedived.
Just this morning ANZ economists senior economists Madeline Dunk and Adam Boyton warned property prices could fall by as much as 10.6 per cent over the next two years, pointing to higher interest rates, declining affordability and the federal government’s property tax reforms as key factors.
House prices in Sydney are tipped to fall by 14.5 per cent from their peak at the start of the year, Melbourne by 12.8 per cent, Brisbane down 7.9 per cent, Adelaide down 9.8 per cent, and Perth down 5.2 per cent.
“It is clear the combination of restrictive interest rates, recent tax policy changes and global uncertainty have dampened sentiment in the market,” they said.
“Auction clearance rates are very soft, coming in below 50 per cent for the past 10 weeks across the capitals.”
Thomas McGlynn, Ray White’s chief executive of performance and value, says consumer confidence is one of the biggest factors in the market’s current conditions.
“Now the market was already softening before we saw the changes in the federal budget with tax reform – that sped up the market softening but it was already there.”
For McGlynn, today’s decision may lead to a spike in market activity and listing volumes, as some vendors return to market, but house prices are unlikely to mirror what we saw earlier this year.
“If we see some stability in the marketplace with interest rates, we may see a return to more activity, more sellers coming on the market, more buyers being able to buy, but that is definitely not going to mean that prices increase,” McGlynn says.
“But it is going to mean that there’s going to be a healthy amount of properties to buy and a healthy amount of buyers. That yes, they might be cautious and they might not be willing to spend what they once were, but they are willing to buy.”
Melbourne-based buyers advocate Emily Wallace agrees today’s hold may bring some more activity to the market, but confidence levels would remain subdued and may not be enough to entice vendors to sell.
“Confidence would come with a drop, but I would say the hold just give [buyers and sellers] that sort of content state,” she says.
“I think more people will enter the market but I think what we really need though is vendors to enter the market because I just don’t think there’s enough properties to match the number of people who do want to buy.”
