The Reserve Bank of Australia’s Monetary Policy Board unanimously held the cash rate target at 4.35% in August, judging monetary policy somewhat restrictive and the economy to be slowing as expected, while inflation remains too high with upside risks. Over the past year, it cut the rate by 25 basis points to 3.60% in August 2025, then raised it by 25 basis points in February, March and May 2026 to 4.35%. Headline inflation is likely to remain high for some time, and is not expected to return to around the midpoint of the 2–3% target range until late 2027, as oil-related price pressures compound domestic capacity constraints. Consumer spending growth is slowing gradually and labour market conditions have eased slightly more than expected, while business investment remains strong and new housing loans have declined noticeably. The exchange rate has appreciated as financial conditions tightened. Global oil supply is expected to take time to recover, sustaining pressure on energy prices and inflation, although growth in major trading partners has exceeded expectations as AI-related investment outweighed the Middle East conflict’s adverse effects. The Board said it could raise the cash rate further if upside risks materialise.
Reserve Bank of Australia2026-08-11
Reserve Bank of Australia Holds Cash Rate Target at 4.35%
The Reserve Bank of Australia unanimously held the cash rate target at 4.35% in August, citing restrictive policy, slowing growth and persistently high inflation. Inflation is not expected to return near the midpoint of the 2–3% target until late 2027, and the Board may raise rates further if upside risks materialise.