Key takeaways
The RBA held the cash rate at 4.35% in August and will make its next interest rate decision on 29 September 2026.
Annual inflation eased to 3.5% in July, down from 3.8% in June, while trimmed mean inflation remained at 3.6%.
All four major banks currently forecast no further cash rate changes in 2026, although the RBA has not ruled out another hike.
Learn what economists predict for September and what a hold, hike or future cut could mean for borrowers and savers
Following the Reserve Bank of Australia’s (RBA) decision to leave the cash rate unchanged at 4.35% in August, attention has now turned to its next interest rate decision on 29 September 2026.
Fresh inflation data released by the Australian Bureau of Statistics (ABS) on 26 August showed the Consumer Price Index (CPI) rose 3.5% over the 12 months to July, down from 3.8% in June.
However, trimmed mean annual inflation, a measure of underlying inflation watched closely by the RBA, remained unchanged at 3.6%. Both measures remain above the RBA’s 2–3% inflation target range.
The July figures are particularly important because they are the final CPI release before the RBA’s September decision. The ABS is scheduled to release August inflation data on 30 September, the day after the RBA meeting.
In its August decision, the RBA said financial conditions had tightened following three cash rate increases earlier in 2026 and that the economy appeared to be slowing as expected.
However, it also said inflation remained too high and that it could raise the cash rate again if upside risks to inflation materialise.
The latest published major bank forecasts favour another hold in September. ANZ, Commonwealth Bank, NAB and Westpac expect their next cash rate movements to be cuts during 2027 rather than further changes in 2026. These forecasts were published before the latest July inflation figures and may change as economists assess the new data.
Today’s inflation result adds a mixed signal to that outlook: headline inflation has eased, but underlying inflation has not fallen. This means the risk of another rate increase has not disappeared.
What is the RBA cash rate?
The RBA cash rate is the interest rate set by the Reserve Bank of Australia for overnight loans between banks. It influences the cost of borrowing across the economy, including many variable home loans and savings products.
When the cash rate moves, lenders review their own interest rates. However, each lender makes independent decisions about if, when and how much they adjust.
What are economists predicting for September?
The latest published forecasts from the major banks favour the RBA leaving the cash rate unchanged in September.
According to Canstar’s forecast roundup, ANZ, Commonwealth Bank, NAB and Westpac currently expect the next cash rate movements to be cuts during 2027. The timing differs between the banks, but none currently forecasts a change during the remainder of 2026.
Following the August decision, NAB maintained its forecast that the RBA will remain on hold through 2026, with the next move expected to be a cut around mid-2027.
Westpac also expects the cash rate to remain unchanged through to mid-2027, although it has acknowledged that another increase later in 2026 remains a risk rather than its central forecast.
The RBA has also kept the possibility of another increase open. In its August monetary policy decision, the Board said it could raise the cash rate further if upside risks to inflation materialise.
The latest CPI figures reinforce why inflation remains central to the September decision. While annual headline inflation fell to 3.5% in July, trimmed mean inflation remained at 3.6%, indicating that underlying price pressures have not eased at the same pace.
The July CPI is the final inflation release before the RBA meets on 29 September. A hold remains consistent with the major bank forecasts published before the July CPI release, but another hike remains a risk if the Board judges inflationary pressures are still too strong. Labour market, household spending and other economic data released before the meeting may also influence its assessment.
What borrowers are seeing right now
Borrowers are continuing to review their budgets, borrowing capacity and loan structures as interest rates remain elevated.
Following the RBA’s decision to hold the cash rate at 4.35% in August, borrowers may still be considering how higher borrowing costs could affect their finances and future property plans.
Some borrowers are reviewing whether a fixed, variable or split home loan better suits their circumstances, while others are exploring refinancing or checking whether their current rate remains competitive.
Higher interest rates can also reduce borrowing capacity, which may influence how much buyers can borrow and the types of properties they consider.
You might also be interested in: What is a serviceability buffer and how does it affect your home loan?
What a September rate decision could mean for borrowers
If the RBA holds
A third consecutive hold would leave the cash rate at 4.35% while the RBA continues assessing how the economy is responding to the three increases made earlier in 2026.
The July inflation figures give the Board more information to weigh: annual headline inflation eased, but underlying inflation remained elevated.
However, lenders make their own interest rate decisions. Home loan rates can still change even when the RBA leaves the cash rate unchanged.
If the RBA hikes again
Another increase could place additional pressure on borrowers already managing higher mortgage repayments and living costs.
Persistently high underlying inflation would be one factor that may increase the case for further tightening, although the RBA has said it will assess incoming data and the evolving balance of risks.
Even relatively small changes in interest rates can affect both repayments and borrowing capacity. Higher rates may also lead some buyers to reconsider budgets, property types, or preferred locations.
If the RBA cuts later in 2027
The four major banks currently expect the cash rate to remain unchanged for the rest of 2026, with cuts forecast to begin at different points during 2027.
These remain forecasts and could change as new economic data becomes available. Any future reductions passed on to borrowers would remain at each lender’s discretion.
Wondering whether interest rates could rise again this year and what that might mean for you? Read our guide on whether interest rates will rise and what you can do to prepare.
Banks may not pass on future RBA moves in full
Even when the RBA adjusts the cash rate, lenders are not required to pass on the full change. Some may move earlier, later, by a smaller amount or by more than the RBA change.
If you’re unsure how any move applies to you, reviewing your loan can bring clarity.
You might also be interested in: Which banks have passed on the RBA’s latest interest rate?
More lenders are competing for borrowers
Even with the RBA cash rate unchanged at 4.35% in August, lenders continue to adjust their home loan rates independently.
Canstar reported on 10 August that 49 lenders on its database were offering at least one owner-occupier variable home loan rate below 6%, up from 38 at the beginning of June. It also reported that 31 lenders had cut new-customer variable rates since the start of June.
The changes highlight that home loan rates do not always move in step with the RBA. Competition, funding costs and individual lender strategies can all influence the rates available to borrowers.
Some lower rates may also be limited to new customers and are subject to individual lender eligibility requirements. Existing borrowers may need to negotiate with their lender or refinance to access a more competitive rate.
If you haven't reviewed your home loan recently, comparing your current rate with what's available may help you understand whether there are more competitive options for your circumstances.
What it means for savers
Rate decisions don’t just affect borrowers.
If rates rise, savings accounts and term deposits may see improved returns, although not all providers move at the same speed or by the same amount.
If rates hold or fall, savers may see returns stabilise or ease. It can be worth reviewing whether your savings structure still suits your goals.
Balancing debt management and savings strategy becomes increasingly important during periods of rate uncertainty.
Cost of living pressures remain in focus
While annual headline inflation eased in July, price pressures remain uneven across household expenses.
Housing was the largest contributor to annual inflation, rising 5.0% over the year to July. New dwelling prices rose 5.7%, while food and non-alcoholic beverages increased 3.2%.
Transport inflation also increased to 1.6%, up from 0.1% in June. Automotive fuel prices rose 7.5% during July, which the ABS attributed to higher world oil prices and the partial unwinding of federal fuel excise relief measures.
For households, the fall in headline CPI does not mean all cost pressures are easing. The RBA also remains focused on underlying inflation, which was unchanged at 3.6% in July.
Higher interest rates can flow through to mortgage repayments, rents and business costs. For many households, that adds to existing cost of living pressures.
Even small rate movements can make a difference. Reviewing your loan structure, repayment strategy and household budget can help you stay prepared.
In some cases, borrowers may also look at strategies like debt consolidation to help manage repayments. This involves combining multiple debts into a single loan, which may reduce overall monthly repayments depending on the structure and interest rate.
You can learn more about how this works in our guide to debt consolidation.
What the next RBA decision could mean for you
While economists debate the next move, it can help to think about what different outcomes could mean for your own plans.
If the RBA… | What you might want to think about |
|---|---|
Raises rates | • Review your borrowing power. Higher rates can reduce how much you can borrow. |
Holds rates | • A pause can be a good time to review your loan and borrowing capacity. |
Cuts rates | • Lower rates could increase borrowing power and reduce repayments. |
If you’re unsure what the next RBA move could mean for your situation, an Aussie Broker can help you review your options and plan your next step.
Tips to prepare for possible rate changes
• Review your current rate and repayment amount
• Check when you last refinanced or negotiated with your lender
• Build or maintain a buffer where possible
• Consider whether fixed, variable or split options suit your situation
• Talk to an Aussie Broker if you’re unsure what’s right for you
With over 1,000 Aussie Brokers across 200+ stores, we can help you understand your options and feel confident about your next step.
Need help reviewing your home loan?
If you’re unsure how a rate hold, hike or future cut could affect you, an Aussie Broker can help you understand your options.
We’ll look at your current rate, loan structure and goals, and help you decide whether refinancing, restructuring or staying put makes sense for your situation.
You can get in touch online, over the phone, or by visiting an Aussie store near you.
Book a free^ chat with an Aussie Broker to review your current loan and explore your options.