Economists split on August RBA rate hike

By Elias Thorne · 2026-07-17

Where rates stand now

The Reserve Bank of Australia left the cash rate unchanged at 4.35% at its 16 June 2026 meeting, following three increases already delivered in 2026.verifiedVerified Source: rba.gov.au^[1] The decision was unanimous, a deliberate pause rather than a pivot.

The Board's statement made clear the job is not done. Headline and underlying inflation remain above the 2-3% target band, and the Board said it is not yet confident that price pressures are sustainably returning to target.^[1] That language left the door open for further action.

The oil shock said

Disruption to global oil supply, centred on the Strait of Hormuz, is doing material damage to Australia's inflation profile. The RBA said the supply shock is adding directly to inflation via higher fuel prices and is passing through to the price of other goods and services across the economy.^[1]

Energy costs embed themselves in transport, food distribution and manufacturing inputs, so even a partial easing of oil prices does not quickly unwind the price-level damage already done. The Board acknowledged oil prices have retreated from their peak but maintained the supply disruption remains a live upside risk to the inflation forecast.

The case for another hike

Westpac is the clearest voice in the hike camp among the major banks. Luci Ellis, Westpac Group Chief Economist, said on 10 July 2026 that "RBA remains hawkish and our conviction regarding a rate hike in August has increased."verifiedVerified Source: westpaciq.com.au^[4] Westpac pointed to recent RBA communication and the persistence of the supply shock as the basis for that elevated conviction.^[4]

A Finder RBA Cash Rate Survey of 38 economists and analysts published on 12 June 2026 found 55% expect at least one more rate rise in 2026, with 62% of that group nominating August as the most likely timing.verifiedVerified Source: finder.com.au^[3] That puts a majority of surveyed experts in the hike-before-year-end camp, though not a commanding one.

The hawks argue the RBA cannot afford another period of waiting while inflation lingers above target. Three hikes in quick succession earlier in 2026 were designed to demonstrate resolve; pausing now, with oil prices still elevated and the labour market tight, risks allowing inflation expectations to drift higher.

The case for holding

CBA, NAB and ANZ each arrive at a different conclusion. Belinda Allen, Head of Australian Economics at Commonwealth Bank, said: "From here we do see a period of 'on hold' from the RBA, depending on economic outcomes and global developments."^[5] Commonwealth Bank economists expect the cash rate to stay at 4.35% for the remainder of 2026.^[5]

NAB Chief Economist Sally Auld said after the June hold that "we expect the RBA to remain on hold for the remainder of this year, but acknowledge that the inflation challenge will remain the main concern for policy makers in the next few quarters."^[6] Auld's framing concedes the inflation problem is real while judging that the three hikes already delivered are sufficient to bring it back to target without further action.

ANZ Economist Sophia Angala said "ANZ Research expects the RBA to keep rates on hold for the rest of 2026, although there is still a risk of a rate hike over the near term."^[7] ANZ's position is a base-case hold with a meaningful tail risk, an acknowledgement that the August meeting is genuinely live rather than a formality.

The hold camp's core argument rests on consumer demand. Mortgage holders are already under pressure from the three earlier rises, and real household disposable income has been squeezed. If demand is cooling fast enough to drag inflation lower on its own, adding a fourth hike risks delivering an unnecessary contraction.

What it means for mortgage holders and housing

For the roughly one-in-three Australian households carrying a mortgage, the stakes around the August meeting are direct and financial. A 25-basis-point hike from 4.35% to 4.60% would add to monthly repayments already elevated by the three earlier increases in 2026. Borrowers on variable rates have had no sustained reprieve this calendar year.

The RBA Board meets on 10-11 August 2026, with the Monetary Policy Decision Statement scheduled for release on 11 August 2026.^[2] The key data release between now and then is the June quarter CPI, which will land before the Board convenes and is likely to be the single most important input into the decision.

Housing prices in Sydney and Melbourne have shown signs of softening under the weight of higher borrowing costs, and a further hike in August would almost certainly deepen that trend. Westpac and the 55% of Finder survey experts who expect another rise argue the RBA's credibility on inflation demands it not blink prematurely, with the June quarter CPI due before the Board's 10 August sitting.

This article is general news and information, not financial or investment advice. Interest-rate and price forecasts are uncertain and may not eventuate; consider your own circumstances or seek licensed advice before making financial decisions.

Elias Thorne

Elias Thorne covers breaking news and sport for Bushletter. Fast and verb-led, he writes with a news-wire cadence and no patience for PR spin.