Australia's Big Banks Expect RBA to Hold at 4.35% as Inflation Eases

Australia's four major banks are aligned in expecting the Reserve Bank of Australia to leave the cash rate unchanged at 4.35% at its meeting on 10 and 11 August, after fresh data showed inflation cooling. The consumer price index rose 3.8% over the twelve months to June, down from 4.0% the previous month and below expectations, while unemployment edged up to 4.4%, above the central bank's forecast, and broader measures of spare capacity reached their highest since late 2021. Commonwealth Bank economists said there is little need to tighten further given the combination of easing inflation, a softening labour market and a weakening housing market, and they expect the cash rate to stay on hold through the rest of 2026 before cuts in 2027. Still, opinion is divided: a survey of economists found a majority expect at least one further rate increase this year, and forecasters have flagged the risk of a hike as late as November should inflation reaccelerate. For households, a prolonged hold keeps variable mortgage repayments and savings rates broadly steady, delaying meaningful relief.