Central bank's August minutes confirm no rate cut was considered, with another rise still a live possibility
The Reserve Bank of Australia (RBA) has signalled that interest rate relief for borrowers remains some way off, with the minutes of its August meeting confirming the board did not consider a rate reduction when it voted to hold the cash rate at 4.35%.
The minutes, released on Tuesday, show the board remains alert to upside inflation risks that could yet prompt further tightening.
"The board will remain focused on its mandate to deliver price stability and full employment and will continue to do what it considers necessary to achieve that outcome, including increasing the cash rate target if upside risks materialise," the minutes said.
Among the risks the RBA is watching are the ongoing Middle East conflict, which could push up fuel and food costs, and the rapid expansion of data centre infrastructure, which may further strain labour and construction markets. RBA deputy governor Andrew Hauser (pictured right), speaking the previous week, also flagged the global AI investment surge as a domestic inflation risk.
"Overall, the risk is that when you go through an investment boom, you will get short-term pressure on inflation and that is relevant to us as we set interest rates," Hauser said. "If those upside risks to inflation crystallise and we don't see inflation coming down we'll have to raise interest rates again."
The Minutes of the August 2026 Monetary Policy Board Meeting have been released: https://t.co/6ZFmDRT9n6 pic.twitter.com/O8T8B2X9TS
— Reserve Bank of Australia (@RBAInfo) August 25, 2026
The minutes landed a day ahead of the July CPI reading — the final inflation print before the RBA's September decision. Annual CPI growth eased to 3.8% in the year to June, while trimmed mean inflation held at 3.6%, both still above the RBA's 2–3% target. The bank's updated forecasts do not see inflation returning to the top of that band until mid-2027.
Housing-related costs continue to exert upward pressure on the index, with rents and new dwelling construction together accounting for roughly 14.5% of the CPI basket, according to realestate.com.au. Separately, national home prices have fallen for four consecutive months, which HSBC chief economist Paul Bloxham said could dampen household spending and assist the RBA's inflation task indirectly.
Rate forecasts from all four major banks suggest the cash rate has peaked, though none expects a cut before at least 2027.
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