The Reserve Bank Monetary Policy Board has announced its August cash rate decision, as it works to tackle above-target inflation.
The Monetary Policy Board of the Reserve Bank of Australia (RBA) has revealed that it will hold the official cash rate at its current level of 4.35 per cent.
The decision, announced on Tuesday afternoon (11 August) was broadly forecast by major bank economists and financial markets, and continues the holding pattern for the second rate decision in a row.
The central bank’s decision to keep the cash rate at its current setting suggests it is prioritising a wait-and-see approach to ensure that the lower-than-expected June inflation print is sustained and to assess the economic impacts of the three consecutive cash rate hikes between February and May.
The policy decision was unanimous.
In its post-meeting statement, the board said that it remained focussed on “ensuring that high inflation does not become embedded.”
“To achieve this, growth in aggregate demand needs to remain subdued to reduce capacity pressures and bring inflation back to target.”
While the RBA acknowledged that the three rate increases delivered since the start of 2026 had tightened financial conditions, it said the economy was slowing broadly in line with expectations.
“Following three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and the economy appears to be slowing as expected,” the board said.
However, the board also warned that inflation remained above target and was unlikely to return to the midpoint of the band until late 2027.
“But inflation is still too high. It is not expected to return to around the midpoint of the target range until late 2027 and there are upside risks to this projection,” it outlined.
“With monetary policy judged to be somewhat restrictive, the Board decided to leave the cash rate target unchanged while it assesses how the economy is evolving.”
The board retained its warning that it was prepared to raise the cash rate again should inflation risks intensify.
“The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise,” the statement read.
Brokers support borrowers through uncertainty says aggregator
The executive director of aggregation group Connective, Mark Haron, said the decision would provide borrowers with a reprieve from further repayment increases, yet added that higher interest rates were continuing to constrain household finances.
“Today's hold decision will be welcomed by borrowers, but many households remain under pressure even with the pause in rates. Higher borrowing costs and ongoing cost-of-living challenges mean many Australians will likely still be carefully managing household budgets,” he said.
“Across our broker network, we're seeing borrowers come to terms with the reality that interest rates could remain elevated for some time. Many are focused on how they can adapt to a higher-rate environment over the longer term.”
Haron said this caution was also becoming evident in property-market activity.
“That caution is also flowing through to broader housing market activity. Confidence remains subdued, with many buyers taking more time to make decisions as they weigh up the outlook for interest rates and property values, while some sellers are choosing to hold off listing until conditions improve,” he explained.
Haron added that brokers were playing an increasingly important role in helping clients respond to prolonged uncertainty.
“We’re seeing brokers step up to support clients through this prolonged period of uncertainty,” he noted.
“Rather than waiting for market conditions to change, they're helping clients manage cash flow, review lending arrangements, structure debt effectively and plan ahead with confidence. In a market where sentiment remains unsettled, that proactive advice can make a real difference."
Refinancing and buyer opportunities
Similarly, Anthony Waldron, the CEO of major brokerage Mortgage Choice, said the decision to hold the cash rate was justified by the latest inflation data, although he cautioned that the RBA may need to lift the cash rate again.
“The RBA’s rate pause makes sense, following the softer inflation data released by the ABS last month. That said, inflation remains sticky enough that the possibility of another cash rate rise this year can't be ruled out,” he said.
“For borrowers, this hold shouldn’t mean standing still, especially when it comes to your home loan. It’s a good opportunity for borrowers to reassess their home loan.
“Our data shows that borrowers are already using this time to make sure their loan is the best for their current circumstances,” Waldron added, noting that around one in three Mortgage Choice home loan submissions in July were for refinancing.
The Mortgage Choice CEO said that potential buyers should use the lead-up to the spring selling season to clarify their borrowing capacity and consider the impact further rate rises could have on future repayments.
“The spring selling season is just a few weeks away, so those looking to buy their first or next home should get their ducks in a row. PropTrack data shows that home values have been softening – falling four months in a row, which is creating opportunities for hopeful buyers who are ready to act,” Waldron explained.
“Speaking to a broker can help you understand what your borrowing power is and to understand how future rate rises could impact your repayments.”
Early action urged for mortgage stress
Meanwhile, the CEO of the Finance Brokers Association of Australia (FBAA), Leo Gagic, said the pause would not ease the difficulties of households already approaching mortgage stress.
He urged borrowers experiencing difficulty to contact their lender before falling behind on repayments.
“Be open and honest about your circumstances and contact your lender as early as possible. Don't wait until you have missed a payment,” he said.
“Clearly outline what has changed, what you can realistically afford, and provide any supporting information requested. This can help you and your lender agree on a sustainable arrangement that gets you back on track.”
He also emphasised the role brokers play in identifying alternatives beyond a borrower’s existing lender.
“Lenders often can’t provide a solution because they are limited to their products, but a broker can look for solutions that suit your individual circumstances,” he said.
The Mortgage & Finance Association of Australia (MFAA) said greater stability around the interest rate outlook can give households, investors and businesses a firmer basis on which to make financial decisions that may have been put on hold.
MFAA CEO Anja Pannek said the decision provided an important degree of certainty in an economic environment where Australians continue to navigate cost-of-living pressures, changing economic conditions and broader uncertainty.
“Certainty matters when people are making significant financial decisions. We have seen households, investors and businesses taking a more cautious approach as they consider the direction of interest rates, the economic outlook and the broader policy environment.
“Today’s decision provides greater stability around one important part of that picture and may give people who have been holding off on borrowing or investment decisions greater confidence to reassess their plans.”
Pannek said a more stable interest rate environment did not mean every borrower or business should make the same decision, but it provided an opportunity to consider their individual circumstances with greater clarity.
“For some Australians, the right decision may be to buy, refinance or invest. For others, it may be to wait. What matters is having the information and confidence to make a decision that is right for your individual circumstances,” she said.
“This is where mortgage and finance brokers play such an important role. Their value is not simply about finding a competitive rate. Brokers help their clients understand their options, assess borrowing capacity and navigate increasingly complex financial decisions.”
She continued: “In an increasingly complex world, trust has never been more important,” Pannek said.
“Mortgage and finance brokers provide choice, competition and personalised support. They take the time to understand their clients’ goals and circumstances and help them make informed decisions about their financial future.”
Where to from here?
Financial markets were confident of an August pause: on Monday (10 August), the ASX 30-Day Interbank Cash Rate Futures contract for August was trading at 95.65, implying a 97 per cent probability that the RBA would keep rates unchanged.
Several economists believe that the central bank will now move to an extended ‘hold’ period, driven by weakening economic momentum and the June CPI figures, which showed annual headline inflation easing from 3.8 per cent to 4 per cent in May.
However, the RBA is also grappling with persistent pressures, with July jobs data showing employment increasing by a stronger-than-expected 76,000 in June to 14.74 million people in seasonally adjusted terms.
All four major banks lined up behind a unified call that the cash rate would remain unchanged in August.
[Related: RBA August cash-rate hold broadly expected]
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