There is very little chance of a rate hike at 11 August 2026, RBA board meeting. The official RBA cash rate currently sits at 4.35%.

There was not enough evidence presented at last week’s quarterly inflation data release ,to indicate that inflation was continuing to pitch higher for now. Headline inflation at 3.8% was down from 4.0% and more importantly the RBA’s preferred measure—trimmed mean inflation—held steady at 3.6%.

That is not to say that there can’t be further rate hikes later this year. Especially when considering the full withdrawal of the Federal Government’s fuel excise duty and the continuing impacts to oil reliant sectors of the economy from the never-ending war between USA/Iran.

Peak Inflation and a slowing economy

Once inflation’s peak-high is reached in the back end of this year or in early 202, the RBA will rely on a slowing economy to do its work of returning inflation back to its target band of 2% – 3%. 

The slowing economy is already showing up in many areas including the deeply pessimistic consumer sentiment numbers and weakening property market. Anecdotally a major-bank friend of mine told me that residential loan volumes have dropped by 50% since the tax changes in May 2026. 

RBA on a mission 

Inflation has effectively been outside the RBA’s target band for more than 4 years. Some of the reasons for this have been circumstantial—Covid, wars etc—but the RBA’s missteps have also contributed.

Given this the RBA is on a mission to finally solve its inflation problem and this time it’s different. They won’t let the opportunity of a waning and slowing economy and waning demand, slip through their fingers.  

That’s why I believe the RBA will be slow to cut interest rates as the economy drifts lower next year, but first it has to be sure that inflation’s high-water mark has been reached. 

Let’s see! 

Please Note – the thoughts and ideas expressed in this Bordez Commentary are my own and not with assistance from artificial intelligence (AI)