RBA August 11 Decision: Four Banks, Four Rate Forecasts

Strong June employment caught economists off-guard and split Australia's big four banks on whether the RBA will hike or hold at its August 11 meeting.

Why June's Jobs Data Has the Banks Divided

Australia's June labour force data, published by the Australian Bureau of Statistics on 23 July, delivered a result that surprised economists. Employment climbed by 76,000 to 14.74 million people in seasonally adjusted terms — well above market expectations. Part-time roles drove much of that gain, rising 47,000 over the month, while the participation rate jumped 0.3 percentage points to 67.0%.

The unemployment rate held steady at 4.4%, because more people entered the labour force than found work. The June quarter average of 4.4% sits above the Reserve Bank of Australia's May Statement on Monetary Policy forecast of 4.2%. Underemployment rose 0.2 percentage points to 6.5% over the month, and annual employment growth came in at 1.7% from June 2025.

That combination — strong headline employment growth but a jobless rate running above the RBA's own forecast — has produced a genuine split among the major banks heading into the August meeting. The Monetary Policy Board is scheduled to meet on 10–11 August, with the cash rate decision due at 2:30pm on 11 August.

For variable-rate borrowers, the stakes are immediate. After three cash rate increases since early February, any further hike would push repayments higher within weeks.

CBA and NAB: Hold at 4.35%

Commonwealth Bank of Australia (CBA) senior economist Belinda Allen described the data as creating a "challenging conundrum" for policymakers. "Employment growth well exceeded both ours and market expectations," she said. Allen pointed to the unchanged unemployment rate as the cleaner signal and flagged the escalating Iran conflict as an additional variable. CBA continues to forecast the cash rate on hold at 4.35%.

National Australia Bank (NAB) senior economist Taylor Nugent reached the same conclusion. The June quarter's average unemployment rate of 4.4% came in above the RBA's May forecast of 4.2%, pointing to marginal easing in labour market tightness. "Combined with signs of easing labour constraints and capacity utilisation in the NAB Business Survey, that leans towards a marginal easing in the RBA's assessment of labour market tightness," Nugent said. NAB expects the cash rate has peaked, with gradual policy normalisation expected from mid-next year.

All four major banks expect the RBA to begin cutting rates next year — the disagreement is whether another hike arrives before then.

If you haven't reviewed your variable rate recently, now is a practical time to check what's currently available rather than waiting for the cycle to turn.

ANZ: Hold in August, but November Not Ruled Out

Australia and New Zealand Banking Group (ANZ) economists Aaron Luk and Jasmine Zheng back a hold at the August meeting, arguing the steady unemployment rate is the more reliable signal. "We think the key takeaway from the unemployment release is the steady unemployment rate, which provides a better signal of underlying labour market conditions than the headline employment gain," they said.

ANZ has not, however, closed the door on further tightening. "We do not rule out ongoing price pressures to push the RBA into a rate hike in November, assuming the August meeting sees no rate change from the board," Luk and Zheng wrote.

For borrowers with fixed-rate loans expiring in the second half of 2026, that uncertainty is meaningful. Use our refinance savings calculator to model the difference between staying put and switching to a lower variable rate now — before any further decision is made.

Westpac: Forecasting an August Hike and Possibly a Second

Westpac stands alone among the major banks in forecasting a rate increase at the August meeting — and potentially a second one after that. Economist Ryan Wells argued that the rise in participation rate tells a different story than the headline employment figure: the economy is adding workers faster than the RBA's models anticipated.

"Labour force participation has generally held up better than employment, resulting in the unemployment rate continuing to drift higher," Wells wrote. He added that the RBA "has a more pessimistic view on labour force participation, which helps explain why it expects a more gradual rise in unemployment," and that if participation continues to surprise to the upside, the central bank may be underestimating how much slack is building — and how persistent inflation could prove.

A Westpac-style fourth hike this year would add further pressure to variable-rate borrowers already absorbing three increases since February.

What Borrowers Should Do Before August 11

With three of the four major banks expecting a hold and one calling a hike, the probability-weighted outlook leans toward no change — but the June quarter CPI data due before the meeting will be the decisive input. The split itself is a signal: this is not a settled picture.

Whatever the RBA decides, the current environment rewards preparation. Use our borrowing power calculator to model your position across different rate scenarios, or compare current refinance options if your lender's rate no longer stacks up. Knowing your numbers before August 11 puts you in a far stronger position than reacting afterwards.

The Adviser, "RBA faces 'challenging conundrum' for August rate decision"