RBA Set to Hold in August: What Borrowers Should Do Now

The Reserve Bank looks likely to hold at the August meeting, but the inflation data beneath the headline number reveals more complexity than it seems.

With the Reserve Bank of Australia meeting on 10 and 11 August, borrowers on variable rates have one question: is another rate rise coming?

The short answer, based on current data and economic forecasts, is probably not — but the detail behind that conclusion matters more than the headline.

Australian Broker reports that ANZ economists now expect the central bank to keep interest rates on hold at the August meeting and to maintain that position for the remainder of 2026, as inflationary pressures ease and unemployment edges marginally higher. However, ANZ's economists also wrote in a note that they expect the board to "retain a hawkish bias and keep open the possibility of further tightening." This is a pause, not a pivot.

The RBA has raised the official cash rate (OCR) three times in 2026, lifting it to its current level of 4.35%. Those increases have already added significant pressure to the repayments of variable rate mortgage holders. The August decision determines whether that pressure gets worse — or simply stays where it is for a while longer.

What the Inflation Numbers Actually Say

The June consumer price index (CPI) data provided some genuine relief. Headline CPI rose 3.8% in the year to June, down from 4.0% in May and below the RBA's own forecast of 4.0%. That improvement is real.

But the trimmed mean — the RBA's preferred inflation measure, which strips out the most volatile price swings — told a different story. Trimmed mean inflation came in at 3.6%, unchanged from the prior period. That means underlying inflation has not eased; it is moving sideways. The RBA has now been outside its 2–3% target band for well over 12 months.

Breaking inflation down by category reveals where the real pressure is building:

- Electricity prices have risen 21.6% over the year - Gas is up 7.8% - Tobacco is up 11.6% - Rents and housing costs are up between 3–6% - Recreation and holiday travel is up 7.5%

Many of these increases reflect government policy as much as market forces. Electricity pricing has been shaped by government rebates, the transition away from coal-fired power stations, and the push toward renewables. Rent and housing costs also carry significant policy influence. ANZ economists separately flagged that "the construction pipeline has reached a record high, raising the risk that competition for scarce resources keeps construction-related inflation elevated even as broader inflation moderates."

Fuel looked positive in the June data, down 6.6% over the year. That figure is already outdated. The fuel excise that had been halved expired recently, and petrol prices in Brisbane have jumped from around $2.00 to roughly $2.50 per litre almost overnight. That reversal will show up clearly in the next CPI read.

The Wages and Jobs Squeeze

The employment picture complicates the RBA's calculation. Unemployment remained at 4.4% in June, unchanged from May, with around 15,000 jobs created in the month prior. That is broadly positive for households, but it also signals the economy is generating enough demand to sustain elevated price levels.

Wages have not kept pace. Annual wage growth came in at 3.3% over the past 12 months, while CPI inflation rose 3.8% over the same period. Quarterly wage growth was 0.8% for the three months to June, with an annual rate of 3.1%. The gap between wages and prices — small as it appears in percentage terms — is what people feel as a persistent squeeze on living standards, even when their pay cheque technically increased.

Mortgage holders are absorbing pressure from both directions: higher repayments on their loans, and real purchasing power that has declined in the face of higher electricity, gas, and grocery bills.

What to Expect — and What to Do About It

Bianca Patterson, mortgage broker and finance specialist at Perth-based Calculated Lending, told Australian Broker she hoped to see the RBA hold rates at the August meeting. "We need a period of stability rather than moving too quickly in either direction," she said. Patterson also noted that there has "not yet been enough time to see the full effect of the three consecutive rate rises, followed by the decision to hold in June," and that cutting rates only two meetings after three consecutive increases "would feel premature."

Analysis of the available data points to roughly a 30–35% probability of a rate rise in August. The more likely outcome is a hold, with the RBA continuing to flag caution around underlying inflation and the wave of government-influenced price pressure still building in energy, fuel, and housing.

For borrowers, a hold is not the same as relief. Rates remain at multi-year highs, and the spread between the best rates currently available in the market and what many existing borrowers are paying may have widened since they last reviewed their loan.

Now is a good time to run those numbers. Our refinance savings calculator shows how much a lower rate could reduce your monthly repayments. If you have not checked what the market is offering recently, our cheapest home loan comparison will give you a current read.

If you are thinking about entering the market for the first time, use our borrowing power calculator to get a realistic picture of what you can borrow at current rates before you start looking at properties. A hold in August buys time — make sure you are using it.