RBA Hold Expected in August, But Another Rate Rise Looms

Bendigo Bank's chief economist forecasts a cash rate hold in August but warns of a possible further hike before the year is out.

What Bendigo Bank Is Forecasting for August

The Reserve Bank of Australia left the cash rate unchanged at 4.35% at its June board meeting, following three hikes earlier in 2026. For mortgage holders hoping that was the last move for a while, Bendigo Bank has some cautiously reassuring news — but with a significant caveat attached.

Bendigo Bank's chief economist David Robertson is forecasting a hold at the 11 August meeting. "It's our prediction here at Bendigo Bank that Aussie homeowners will be able to catch their breath in August, with recent economic data pointing to a hold at the RBA's next meeting," Robertson told MPA Australia.

That hold, however, is not a signal that rates are about to fall. Robertson warned that the RBA had already made its stance plain at the June meeting, stating it would do whatever was necessary to achieve its inflation mandate — including another rate increase if required.

Why Inflation Remains the Sticking Point

Headline CPI fell to 4.0% in the May data, which might look encouraging at first glance. The problem is the underlying or "core" measure, which is a better guide to persistent inflationary pressure and which actually rose to 3.6%. Robertson said this figure is "likely to remain above target for at least another 12 months" — a long way from the RBA's 2–3% target band.

A tight labour market is adding to the challenge. National unemployment sits at 4.4%, and Robertson described that as a "complicating factor" for the RBA's price stability goals. When jobs are plentiful and wages are rising, households tend to keep spending, which keeps prices elevated regardless of what the rate setting does elsewhere.

There are genuine moderating forces at play. Robertson pointed to easing oil prices and improved shipping conditions through the Strait of Hormuz as factors that take pressure off imported inflation. But neither is sufficient to bring the RBA's tightening bias to an end on its own.

One More Hike Is Still on the Table

The most important part of Bendigo Bank's outlook for mortgage holders is the tail-risk warning: Robertson believes a further increase to the cash rate is possible before the year is out.

"Our view remains the tightening bias will continue throughout the new financial year, with the risk of one more hike around year-end, with recent talk of rate cuts next year appearing premature," he said.

He also flagged that the concept of a "neutral" cash rate — the level at which policy is neither restrictive nor stimulative — has been drifting upward. Bendigo Bank now estimates this neutral level sits at around 4%. That means the current rate of 4.35% is "only mildly restrictive based on RBA estimates," in Robertson's words. In other words, the current rate may not be doing as much heavy lifting on inflation as borrowers might assume.

If cuts do arrive in 2027, Robertson said they would require specific conditions: "Rate cuts in 2027 would need several prerequisites: the underlying inflation rate would presumably need to be close to 2.5%, and the RBA would need to form the view that the economy needs support." His base case is that the cash rate "may well plateau at or just above its current level for the rest of this year and for most of next."

What to Do With Your Home Loan Now

The practical implication for borrowers on variable rates is to plan for the current rate environment to persist well into 2027. That does not mean panic — it means being deliberate.

Start by stress-testing your repayments. Use our [repayment calculator](/calculators/repayment) to see what your monthly obligations would look like if rates moved higher, and whether your budget could absorb that comfortably.

If you have not reviewed your current home loan recently, now is the time. Variable rates across different lenders can vary meaningfully for the same borrower profile. Browse [cheapest home loans](/home-loans/cheapest) to see what is on the market, or use our [refinance savings calculator](/calculators/refinance-savings) to quantify what switching could mean for you.

For those considering fixing all or part of their loan, fixed rates already price in some expectation of the future rate path, so they do not automatically represent a saving over variable. But they do offer certainty — which has real value if your household income is under pressure.

The August RBA decision will hinge on three things, according to Robertson: jobs data, inflation, and household spending figures. Watch for the June quarter CPI and monthly labour force data due before the 11 August meeting.

[MPA Australia](https://www.mpamag.com/au/news/general/bank-tips-cash-rate-hold-in-august-one-more-hike-possible/581216) has the full economic commentary from Bendigo Bank's team.