Australia's central bank has raised its cash rate three times in 2026 — in February, March, and May, each by 0.25 percentage points — bringing it to 4.35%. That's a notably different path from central banks elsewhere cutting or holding, and it reflects the RBA's explicit warning that inflation is likely to "stay higher for longer" than earlier expected. The next decision lands August 11, 2026, and economists are genuinely divided on whether it brings a fourth hike.
The short version: cash rate is 4.35% after three 2026 hikes. About 55% of economists expect at least one more hike this year, and most of those expect it in August. But CBA, NAB, and ANZ currently forecast no further move in 2026, while Westpac expects hikes at both the June and August meetings, targeting a peak of 4.85%.
Why is Australia still hiking while other countries cut?
The RBA's mandate centers on keeping inflation within its target range, and by its own board's comments, inflation is expected to remain elevated for longer than previously forecast. Where central banks like Canada's are weighing slowing growth against inflation risk and choosing to hold, the RBA's current read is that inflation itself is still the bigger problem — worth addressing even if it means higher borrowing costs squeezing households and businesses in the near term.
The split among major forecasters
- Westpac: forecasts hikes at both the June and August 2026 meetings, targeting a cash rate peak of 4.85% before an eventual reversal.
- Commonwealth Bank, NAB, ANZ: currently expect the RBA to hold the cash rate steady through the rest of 2026 — no further hikes priced in.
- Broader economist surveys: roughly 55% expect at least one more 2026 hike, and of those, about 62% see August as the most likely timing.
The deciding factor for the actual August 11 decision will be the inflation and labour-market data released in the weeks before it — not any single forecaster's current guess.
What another hike would cost mortgage holders
Most Australian mortgages are variable-rate, so RBA moves flow through to monthly payments quickly.
| Scenario | Rate | Monthly payment, $600,000 / 30-year mortgage |
|---|---|---|
| Current variable rate (cash rate 4.35% + typical margin) | 6.10% | $3,635.97 |
| If RBA hikes 25 bps in August | 6.35% | $3,733.41 |
That's roughly $97 more a month on a $600,000 mortgage for a single quarter-point move — and if Westpac's forecast of a run toward 4.85% plays out, that compounds with each subsequent hike.
What to watch before August 11
- Quarterly and monthly inflation prints released in the weeks leading into the meeting — the single biggest swing factor.
- Labour market data — a tight jobs market gives the RBA more room to justify another hike without fear of overcooking a slowdown.
- Global conditions — softness in major trading partners could argue against a hike even if domestic inflation data alone would support one.