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%
NAB expects a rate hike in September, forecasting a 25bp rise to 4.6%.
ANZ, CBA and Westpac all expect a rate hike in November. All four big banks now forecast a hike before the end of the year.
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 major bank outlook has shifted following the July inflation figures, with all of the big four now expecting another rate rise before the end of the year. See what each bank is forecasting below.
The latest inflation result, along with stronger growth data released in early September, has firmed up that view considerably. Where the banks still differ is timing, not direction.
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 outlook has firmed up considerably since the July CPI print, and all four of the big four banks now expect another rate rise before the end of the year.
In its August decision, the RBA kept the door open to a further hike, saying it could act if upside risks to inflation materialised.
The July inflation data has done exactly that: annual headline inflation eased to 3.5%, but trimmed mean inflation, the RBA's preferred underlying measure, held at 3.6%, well above target and higher than markets had expected.
That's prompted all four major banks to revise their calls, with Westpac the last to move.
Here's where each of the big four banks currently sit:
Bank | Forecast | Timing | Cash rate if realised |
|---|---|---|---|
Hike | September 2026 (25bp) | 4.60% | |
Hike | November 2026 (25bp) | 4.60% | |
Hike | November 2026 (25bp) | 4.60% | |
Hike | November 2026 (25bp) | 4.60% |
ANZ was the first of the big four to revise its forecast, switching to a November hike call within hours of the 26 August CPI release.
NAB followed the next day and became the first bank to specifically nominate a September move, pointing to the Board's repeated signalling that it would act on upside inflation risks.
CBA also switched to a November call on 27 August, saying the broad-based upside surprise in the July CPI had crossed the threshold needed to trigger further tightening. CBA has flagged a September move as a live but secondary risk, while ANZ says the July data wasn't quite strong enough on its own to justify moving that early.
Westpac held out the longest, but reversed its call on 8 September. Chief economist Luci Ellis pointed to stronger-than-expected household incomes and larger spillovers from the data centre boom as reasons demand is proving more resilient than the RBA had assumed, making it harder for inflation to ease sustainably.
Westpac still sees November as more likely than September, expecting the RBA to prefer waiting for the fuller quarterly inflation data before acting. Its longer-term view is largely unchanged: it's pencilling in three 25bp cuts starting August 2027, bringing the cash rate to 4.10% by the end of 2027 and 3.85% by the end of 2028.
Labour market, household spending and other economic data released before the 29 September meeting will also factor into the RBA's decision.
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.
These forecasts remain subject to change as the RBA considers incoming inflation, labour market and household spending data.
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
A future cut remains possible, but the big four now agree on the near-term direction. All four are forecasting a hike before the end of 2026 (see table above), and the main point of difference left is timing.
Westpac, the last to revise, still has the clearest view on timing, with three cuts pencilled in from August 2027 (see the detail above).
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.
