Monetary Policy Board flags 'heightened uncertainties' for domestic economic activity and inflation
The Reserve Bank of Australia (RBA) held the cash rate at 4.35% at its June 2026 Monetary Policy Board meeting, resisting pressure to move in either direction as it waits for further evidence that inflation is returning sustainably to its 2-3% target band.
The Board's decision to hold was unanimous, reflecting growing confidence that the cumulative effect of previous rate rises is working its way through the economy, though the Board cautioned that it remained attentive to upside risks.
“As expected, the disruption to global oil supply is having an impact on inflation. Higher fuel prices have added directly to inflation and there are indications that this is passing through to the prices of other goods and services, so inflation is likely to remain high for some time. This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy,” said the RBA in a statement.
Today's hold comes after the RBA raised the cash rate to 4.35% in May, marking the third consecutive increase in 2026.
With the cash rate remaining at 4.35%, Australian mortgage holders with variable-rate home loans will see no immediate change to their repayments. The decision offers a degree of stability for borrowers who have faced three consecutive rate increases this year.
The Big Four – Commonwealth Bank, ANZ, NAB, and Westpac – have already repriced their home loan products following earlier rate rise. Brokers and lenders will be watching closely for any signals from the RBA about the timing of potential rate cuts, which markets had partly priced in for the second half of 2025.
What happens next?
While all major banks expected today’s hold, their forward guidance varies.
Commonwealth Bank, NAB and ANZexpect the cash rate to remain on hold for the rest of 2026, with easing beginning in 2027.
NAB is forecasting the rate to reach 3.6% by end-2027, while ANZ is tipping 25-basis-point cuts in September and December 2027 to bring the cash rate to 3.85%.
Westpac is the clear outlier, forecasting two further 25-basis-point increases this year – in August and September – before any easing begins.
