11.08.202604:37:26UTC+00RBA Holds Key Rate Steady

The Reserve Bank of Australia left the cash rate unchanged at 4.35% at its August 2026 meeting, in a unanimous decision that matched market expectations. Policymakers noted that financial conditions have tightened following three rate increases earlier in the year and that the economy is slowing in line with their forecasts. However, inflation remains uncomfortably high. Capacity constraints contributed to the inflation pickup in the second half of 2025, while higher oil and related commodity prices, driven by the conflict in the Middle East, have added further upward pressure. Although short-term inflation expectations have eased somewhat, they remain elevated. At the same time, growth in consumer spending is moderating, housing market momentum has weakened, and labour market conditions have softened more than anticipated. The Board expects inflation to remain above target for some time and to return to around the midpoint of the target range only in late 2027, with risks tilted to the upside. Against this backdrop, the Board chose to hold the cash rate while it assesses incoming data but signalled it may raise rates again if inflation risks intensify.