RBA Holds Cash Rate at 4.35% Again: August 2026 Decision Explained
The Reserve Bank left the cash rate unchanged at 4.35% on 11 August 2026, the second consecutive hold following June. The decision was unanimous and widely expected, but Governor Michele Bullock made clear the board is not close to cutting. Here is exactly what was said, why, and what it means for your mortgage.
Did the RBA raise or hold interest rates in August 2026?
The RBA held the cash rate at 4.35% on 11 August 2026, the second consecutive hold after June's decision. The board was unanimous, and the outcome had been fully priced in by markets and all four major banks. Governor Michele Bullock said the board considered only a hike or a hold at this meeting, not a cut, and that policy remains restrictive and tight with a further hike still possible if inflation surprises to the upside.
Key Takeaways
- 1The RBA held the cash rate at 4.35% on 11 August 2026, its second consecutive hold after June.
- 2The decision was unanimous and widely anticipated by markets and all four major banks.
- 3June quarter inflation came in at 3.8% headline and 3.6% trimmed mean, both still well above the 2-3% target band.
- 4Governor Bullock said a near-term rate cut was not discussed, only whether to hike or hold, and that policy remains "restrictive and tight."
- 5The board says market pricing of rate cuts over the next six months is premature, and a further hike remains possible if upside inflation risks materialise.
- 6All four major banks now expect the RBA to hold for the rest of 2026, with rate cuts pushed out to 2027.
A Cycle of Three Hikes, Then Two Holds
The cash rate bottomed at 3.60% in August 2025, following three cuts the RBA has since acknowledged were premature. The re-tightening cycle began in February 2026 and delivered three consecutive hikes: February to 3.85%, March to 4.10%, and May to the current 4.35%. The board has now held that level twice in a row.
Cash Rate Path, August 2025 to August 2026
Three hikes to reach 4.35%, followed by two consecutive holds
The plateau from May through August 2026 reflects the board judging the current setting appropriately restrictive while it waits for inflation to fall further.
At 4.35%, the cash rate sits back at the November 2023 peak and its highest level since 2011. Two consecutive holds suggest the board believes this level is doing its job, without yet being confident enough in the inflation trajectory to consider cutting.
Why the Board Held Rather Than Hiked or Cut
June quarter inflation data, released in late July, came in softer than feared but still uncomfortably high: headline CPI at 3.8% and trimmed mean at 3.6%, both well above the top of the RBA's 2 to 3% target band. That was enough to keep the board from hiking again, but nowhere near enough to justify a cut.
June Quarter Inflation vs the RBA's Target
Both measures remain above the 3% ceiling of the target band
Dashed line marks the midpoint (2%) of the RBA's 2-3% target band. The board does not expect inflation to return to around the midpoint until late 2027.
In her press conference, Governor Bullock said the board discussed only two options at this meeting: raising the cash rate or holding it. A cut was not on the table. She reiterated that policy is "restrictive and tight," and that the board is ready to raise the cash rate further if upside inflation risks materialise.
Markets Are Pricing Cuts Sooner Than the Board Wants
One of the more pointed parts of the press conference addressed the gap between market pricing and the board's own thinking. Bullock said market pricing of cuts over the next six months does not align with the board's view, effectively telling traders they are ahead of themselves. That is a deliberately hawkish signal, designed to prevent financial conditions from loosening prematurely on the expectation of cuts that are not imminent.
A Hawkish Hold, Not a "Peak Is In" Signal
A hold accompanied by language like this is materially different from a hold that signals the tightening cycle is over. Fixed mortgage rates, which price off swap markets and RBA language rather than the cash rate itself, are unlikely to fall meaningfully while the board keeps talking this way.
What the Big Four Banks Expect From Here
All four major banks now forecast the RBA holding for the remainder of 2026. Westpac, previously the most hawkish of the majors with a call for two further hikes, abandoned that view within a day of the softer June CPI print. All four have pushed their first expected rate cut into 2027.
| Bank | 2027 forecast | Projected end rate |
|---|---|---|
| CBA | 2 cuts (May, Aug 2027) | 3.85% by Q3 2027 |
| NAB | 3 cuts (Jun, Sep, Dec 2027) | 3.60% by end 2027 |
| ANZ | 2 cuts in H2 2027 | 3.85% (approx) |
| Westpac | Hold through rest of 2026 | 2027 timing under review |
The consensus is clear: no relief in 2026, with modest cuts starting sometime in 2027 contingent on inflation actually returning toward target. For a full breakdown of how banks are responding to the hold right now, including whether variable and fixed rates might still move, see our companion article on what the hold means for your bank and your rate.
What This Means If You Have a Mortgage
No change to variable repayments
Lenders only reprice variable loans when the cash rate itself moves. A hold means your repayment stays exactly where it was after the May hike.
Budget for another six weeks of certainty, not relief
With the next decision not due until late September, and the board flagging no near-term cut, borrowers should plan on 4.35% holding for some time rather than banking on an imminent reduction.
Frequently Asked Questions
Raj Bhangu
Principal Mortgage Broker, iSmart Finance Group
Raj Bhangu is the principal broker at iSmart Finance Group, specialising in home loan finance and helping clients navigate RBA rate cycles and lender policy changes across Sydney and beyond.
Sources & References
This article references information from the following authoritative sources:
- Australia Holds Key Rate to Counter Elevated Inflation PressuresBloomberg
- RBA leaves cash rate unchanged at 4.35% in August monetary policy meeting, as expectedInvestingLive
- RBA governor Bullock: We did not discuss a rate cut at this meeting, only a rate hike or to holdInvestingLive
- Major banks united on cash rate forecastBroker Daily
- Cash Rate TargetReserve Bank of Australia
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Our content is based on industry expertise, regulatory guidelines from ASIC and APRA, and data from the Reserve Bank of Australia. All information is current as of the publication date and subject to change.