At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent.
Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures. TheWhile latestthe dataimpact showof thatthe headlineMiddle andEast underlyingconflict on inflation arehas so far been less than expected, headline inflation is still too high. OilTrimmed pricesmean haveinflation easedalso inremains recentelevated weeks,and althoughis energylittle changed from the March quarter. Oil and most related commodity prices remain higher than they were prior to the conflict in the Middle East conflict. ThereSome are signs that some firms experiencing cost pressures are increasing the prices of their goods and services and others are looking to do so. Short-term measures of inflation expectations have eased but remain higher than earlier in the year.
Financial conditions have tightened this year in response to three increases in the cash rate target this year. Money market interest rates and government bond yields have risen, and the exchange rate has appreciated. There are signs that growth in consumer spending growth is slowing gradually as expected, while growth in business debt and momentuminvestment is strong. Momentum in the housing market has shifted, with housing prices falling in some capital cities. Theand unemploymentnew ratehousing wasloans higherdeclining thannoticeably. expectedLabour in April, but other measures of labour market conditions have beeneased by a little more resilient.than Growthexpected in businessrecent investmentmonths. isLabour strongmarket andleading creditindicators ispoint readilyto availableonly tolimited botheasing householdsin andthe businessesnear term.
There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation. Resolution of the conflict in the Middle East isconflict atremains an early stageuncertain, and there are plausible scenarios where inflation is higher and activity lower than envisaged under the May baseline forecastsforecast. Global oil supply issues will take some time to resolverecover, maintaining upward pressure on global energy prices and inflation., Atin thewhich samecase time,domestic ainflationary pressures could be higher than expected. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia. So far, growth in Australia’s major trading partners andhas inbeen stronger than expected, as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict. In Australia, historically weak productivity growth continues to constrain potential growth.
AsThe expected, the disruption to global oil supply is havingadding an impact on inflation. Higher fuel prices have added directly to inflation and there are indications that thishigher isfuel passingprices are being passed 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 higheffect inflation recorded around the start of 2026, reflecting capacity pressures in the economy.
The Board remains focused on ensuring that high inflation does not become embedded once the impulse from higher oil prices has passed through. To achieve this, growth in aggregate demand needs to slowremain subdued to reduce capacity pressures and help bring inflation back to target. Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy isappears to be slowing as expected. But inflation is still too high. andIt is not expected to return to around the Boardmidpoint of the target range until late 2027 and there are upside risks to this projection. With monetary policy judged thatto itbe wassomewhat appropriaterestrictive, the Board decided to leave the cash rate target unchanged while it assesses how the responseeconomy is evolving. The Board will continue to previousdo interestwhat rateit risesconsiders andnecessary theto impactbring ofinflation sustainably back to target, including increasing the oilcash supplyrate disruptiontarget further if upside risks materialise.
TheAccordingly, the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market. Monetary policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment. It will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.
Today’s policy decision was unanimous.
Minutes of the Reserve Bank Board meeting, published two weeks after the decision.Governor Michele Bullock addresses the media after the monetary policy decision.
The RBA's assessment of the economy that the Board considered in making its decision.
Back to comparison
Monetary Policy DecisionAugust 11, 2026Hawkish
What changed in the Monetary Policy Decision on August 11, 2026?
Hawkish hold relative to June: inflation persists longer, with upside risks
Relative to June, the August decision is hawkish because inflation is described as more persistent, with a return to the target midpoint delayed until late 2027 and upside risks identified. Softer spending and labour conditions temper the shift, but the Board retains a conditional option to raise rates.
Exact textual change
Computed from the two canonical source releases.
RemovedAdded
Current release
At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent.
Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures. While the impact of the Middle East conflict on inflation has so far been less than expected, headline inflation is still too high. Trimmed mean inflation also remains elevated and is little changed from the March quarter. Oil and most related commodity prices remain higher than they were prior to the Middle East conflict. Some firms experiencing cost pressures are increasing the prices of their goods and services and others are looking to do so. Short-term measures of inflation expectations have eased but remain higher than earlier in the year.
Financial conditions have tightened in response to three increases in the cash rate target this year. Money market interest rates and government bond yields have risen, and the exchange rate has appreciated. There are signs that consumer spending growth is slowing gradually as expected, while growth in business debt and investment is strong. Momentum in the housing market has shifted, with housing prices falling in some capital cities and new housing loans declining noticeably. Labour market conditions have eased by a little more than expected in recent months. Labour market leading indicators point to only limited easing in the near term.
There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation. Resolution of the Middle East conflict remains uncertain, and there are scenarios where inflation is higher and activity lower than forecast. Global oil supply will take time to recover, maintaining upward pressure on global energy prices and inflation, in which case domestic inflationary pressures could be higher than expected. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia. So far, growth in Australia’s major trading partners has been stronger than expected, as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict. In Australia, historically weak productivity growth continues to constrain potential growth.
The disruption to global oil supply is adding directly to inflation and there are indications that higher fuel prices are being passed through to prices of other goods and services, so inflation is likely to remain high for some time. This inflation impulse is in addition to the effect of capacity pressures in the economy.
The Board remains focused 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. 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. 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. 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 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.
Accordingly, the Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. Monetary policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment.
Today’s policy decision was unanimous.
Governor Michele Bullock addresses the media after the monetary policy decision.
The RBA's assessment of the economy that the Board considered in making its decision.