RBA Holds at 4.35% as Housing Momentum Shifts and Inflation Stays Above Target

The Reserve Bank of Australia left the cash rate at 4.35% on 11 August, citing high inflation and noting prices are falling in some capital cities.

The Reserve Bank of Australia held the cash rate at 4.35% on 11 August 2026, a decision the Monetary Policy Board reached unanimously. In its statement the Board said "headline inflation is still too high" and that trimmed mean inflation "remains elevated and is little changed from the March quarter." The Board does not expect inflation back around the midpoint of its target range until late 2027, and it flagged upside risks to even that timing.

Oil Supply Feeding Through to Broader Prices

The RBA named its main pressure point directly: "The disruption to global oil supply is adding directly to inflation and there are indications that higher fuel prices are being passed through to prices of other goods and services, so inflation is likely to remain high for some time." That last clause is the operative one. A fuel shock that stays confined to petrol prices washes out of the annual figures; one that reaches into freight, food and services does not.

The Board's guidance left the door open in one direction only. It said it will "continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise." Elsewhere in the economy, business debt growth and investment remain strong while consumer spending slows gradually.

The RBA's Housing Read, and a Number That Looks Like It Disagrees

On property the Board was explicit: "Momentum in the housing market has shifted, with housing prices falling in some capital cities and new housing loans declining noticeably."

Set that against Glopra's data from 23 July 2026, which shows Australian prices up 10.8% year on year in local currency and 17.4% measured in US dollars, on a national average of USD 6,500 per square metre. The two readings are not in conflict, and it is worth being precise about why. Glopra's figure is a trailing twelve-month national average — it covers the period from roughly July 2025 onward and aggregates every market in the country. The RBA is describing recent momentum in specific capital cities. A market can post double-digit gains across a full year and still be softening in its most recent months, and a national average can rise while individual capitals fall. Neither number corrects the other; they answer different questions over different horizons.

Forecasts, Clearance Rates and the After-Tax Yield

Third-party commentary is more pessimistic than either measure. ANZ economists have forecast that property prices could fall 10.6% over two years, with Sydney potentially declining 14.5% from its peak — a bank projection, not an outcome. Domain reported on 11 August that auction clearance rates have stayed below 50% across the capital cities for 10 consecutive weeks. PRD chief economist Dr Diaswati Mardiasmo characterised the effect of a rate hold as a "slow-burn" rather than an immediate revival.

One arithmetic point sits underneath all of it. Glopra's data puts Australia's gross rental yield at 4.69%, with an effective 30% tax rate on rental income in the standardised non-resident case. That leaves materially less than the headline yield implies, and the residual sits against a cash rate of 4.35% that sets the floor for financing costs. The gap between gross and after-tax return is wider in Australia than the top-line percentage suggests.

Sources: Reserve Bank of Australia, Monetary Policy Decision MR-26-19 (11 Aug 2026) https://www.rba.gov.au/media-releases/2026/mr-26-19.html; Domain https://www.domain.com.au/news/rba-august-2026-1541698/

Market data: Australia