RBA holds cash rate at 4.35% with September 29 decision finely balanced
The RBA holds the cash rate at 4.35% until its September 29 decision, with economists divided on whether the hiking cycle has ended or one more increase is coming before cuts begin.
The Reserve Bank of Australia will hold the official cash rate at 4.35% for the next seven weeks, leaving the door open to another interest rate increase at its September 29 meeting. The August decision was unanimous, with Governor Michele Bullock confirming the Board considered only a hold or a hike, not a cut. That positioning has left economists divided ahead of the September meeting, with the trimmed mean CPI for the September quarter not available until late October, well after the Board must decide.
The RBA has hiked three times in 2026. The cash rate target rose 25 basis points to 3.85% in February, to 4.10% in March, and to 4.35% in May. The May increase passed through to variable mortgage rates within weeks, and the RBA's own modelling suggests the full impact of the May hike has not yet been felt in household budgets. That lag effect is one reason the Board is moving cautiously.
What the August minutes reveal
The August statement noted that headline inflation cooled in June and that property prices declined by more than anticipated in recent months. Those two factors gave the Board room to hold, but not enough to commit to a cut. Bullock was explicit in the post-decision press conference: the Board is not yet confident that inflation is moving sustainably toward the 2 to 3 per cent target band.
Monthly CPI indicator data from the ABS will be the most timely read on underlying inflation before the September meeting. The Board will also have July employment figures and the Wage Price Index for the June quarter, published in August. If wage growth continues to outpace productivity and services inflation remains sticky, the case for a further hike strengthens. If the monthly indicators show broad-based moderation, the hold is more likely to be extended into the final quarter of 2026.
The ASX RBA Rate Tracker calculates market expectations from 30-day cash rate futures. The indicator updates daily and reflects the probability priced by traders for a move at each meeting. As of early September, the market is assigning roughly equal probability to a hold and a 25-basis-point hike at the September 29 meeting, with the balance shifting week by week as data arrives.
What it means for Sydney mortgage holders
The cash rate target is set by the RBA, but the rate you actually pay is set by your lender. Banks and non-bank lenders typically move in the same direction as the RBA, but not always by the same amount, and not always at the same time. Borrowers on variable rates have already seen repayments increase three times in 2026. Fixed-rate borrowers rolling off loans written in 2022 or 2023 are facing resets at rates that are 1.5 to 2 percentage points higher than their original terms.
If the RBA holds in September, variable mortgage holders will see no immediate change, but lenders may adjust their standard variable rates independently in response to funding costs and competitive pressure. If the RBA hikes to 4.60%, most lenders will pass that through in full within one or two interest rate cycles, adding roughly $50 to $70 per month in repayments on a $600,000 loan.
Refinancing remains the most immediate action available to borrowers who suspect they are paying more than the market offers. Comparing the current variable rate against what is available from competing lenders, checking whether an offset account is being used effectively, and reviewing the repayment buffer are the three steps most likely to improve a household's position before any further RBA move.
The broader policy context
The RBA's August Statement on Monetary Policy noted that the economy is growing below trend and that the labour market is cooling, but that services inflation and wage growth remain elevated. That mix has produced a hold-and-watch posture that could persist for several meetings. The November Statement on Monetary Policy will provide updated economic forecasts, and the November cash rate decision will be the first opportunity for the Board to signal whether the hiking cycle is definitively over.
The RBA's next meeting is scheduled for September 28-29, 2026, with the decision announced at 2:30pm AEST on Tuesday 29 September, followed by a press conference at 3:30pm AEST. No updated set of economic forecasts will be published alongside the September decision, as it is not a Statement on Monetary Policy meeting. The post-decision statement will be the main document to watch for shifts in the Board's language on future policy moves.