RBA holds cash rate at 4.35%, keeps tightening bias

Published Aug 11, 05:31 AM UTC

The Reserve Bank of Australia (RBA) held its cash rate steady at 4.35% for a second consecutive meeting in August 2026, as expected by markets. The central bank reiterated its commitment to bringing inflation back to its 2-3% target band and warned it may hike again if upside risks materialize. The RBA has already raised rates by 75 basis points this year to reverse 2025's policy easing, driven by surging energy costs. The decision was unanimous. The Australian dollar remained flat at US$0.7055, and three-year bond yields were unchanged at 4.55%. Swaps indicate a 40% chance of another rate increase this year, down from 50% before the decision. The housing market has weakened significantly, with tumbling auction clearance rates and a slump in sales, but consumer spending and the labor market remain solid. The RBA noted that aggregate demand growth needs to remain subdued to reduce capacity pressures.