Reserve Bank of Australia — Policy Preview

Decision due: Tuesday, 11 August 2026, 14:30 AEST · Current cash rate target: 4.35%

1. Executive summary

The Monetary Policy Board is expected to leave the cash rate target unchanged at 4.35%. The single most important driver is the June CPI, where the trimmed-mean measure printed flat at 3.6% and came in below consensus, easing pressure for an immediate further increase. The key risk is that the new forecasts in the Statement on Monetary Policy, the first full update since May, show a slower return of inflation to the 2-3% band once the oil-shock pass-through is incorporated, which could lead the Board to retain an explicit tightening bias.

2. The call

Surveyed economist consensus is for a hold. We agree and expect the Board to leave the cash rate target at 4.35%, consistent with the unanimous decision announced on 16 June that paused after the three 25 basis point increases earlier in 2026. Big-four bank forecasts have converged on a hold after the June CPI release, with no major house anticipating a cut or hike at this meeting. Positioning therefore appears aligned with no change tomorrow; any deviation would require the new projections to surprise markedly on the inflation outlook. A hold would allow the Board to assess the lagged effects of the earlier tightening and the Middle East oil disruption while keeping the option open for further increases if required.

3. The committee

Lean labels summarise RoboMacro's read of each member's public communications over the past six months, from Hawkish to Dovish. A lean is only assigned where recent remarks carry a monetary-policy stance: 3 of 9 members currently qualify (Bullock, Hauser, Harper).

Governor Bullock and Deputy Governor Hauser remain the clearest hawkish voices, with Bullock’s 28 July speech stressing the long-term costs of delaying tight policy. Ian Harper’s final meeting before his term ends on 31 August removes one explicitly hawkish external perspective. The recorded votes show the Board moved from a 5-4 split on the March hike and an 8-1 split on the May hike to a unanimous hold in June, when it judged it appropriate to assess the response to the cumulative 75 basis point tightening and the oil-supply disruption while inflation remained too high. With several non-executive members lacking recent policy-tilted remarks, the unattributed vote counts and the Governor’s tone will carry most weight.

4. Data since the last decision

No new release since the last decision for: Real GDP growth (QoQ), Real GDP growth (YoY), Wage price index (YoY) — the committee sees the same print(s) it saw last time. Market rows are measured from the 11 Jun close — the last observation common to every market series on or before the last decision.

Inflation prints since the 16 June decision have surprised to the soft side. The monthly CPI indicator fell 0.2 percentage point to 3.8% in June while the trimmed-mean measure, the Bank’s primary gauge, remained unchanged at 3.6% and undershot the 3.7% consensus; the quarterly figures showed a similar pattern with trimmed-mean CPI rising only 0.1 percentage point to 3.6%. These outcomes occurred even as housing and electricity continued to lift headline readings, the latter partly reflecting the expiry of government rebates. Labour-market data have been firmer, with employment rising 76.3k in June against a 15k consensus and the unemployment rate holding at 4.4%. Survey measures improved, consumer inflation expectations dropped sharply to 4.7%, PMIs moved higher, household spending beat expectations, and the trade balance swung to a larger-than-forecast surplus. Oil prices have fallen over 10% from June levels after peaking at 93.08 in late July, while the AUD has appreciated and bond yields have edged higher.

The outlook is for inflation to remain above the 2-3% band in the near term but with momentum no longer rising, while activity has proved resilient and the labour market shows limited slack. The trimmed-mean CPI is doing the decisive work: its stabilisation at 3.6% after earlier increases argues against an immediate hike even as the oil shock’s second-round effects are still filtering through. The policy stance is restrictive, justified by inflation that is still too high, resilient demand, and a labour market that has not yet loosened materially.

5. What the speeches say

Governor Bullock’s speech published on 28 July struck the most hawkish recent note on the committee, arguing that “Putting off a period of tight monetary policy today can mean higher rates and higher unemployment down the track” and drawing on 1970s lessons about the need for credibility. Deputy Governor Hauser, in remarks published 24 June, highlighted the nonlinear Phillips curve, noting that cost and price pressures rise more rapidly at low levels of unemployment and citing research on optimal policy under such conditions. Non-Executive Member Ian Harper, in a speech published 2 June but already available at the last decision, stressed that inflation had already turned higher before external shocks and that the Board must prevent second-round effects from becoming embedded.

Among staff communications, Assistant Governor Sarah Hunter’s fireside chat published 30 July acknowledged the recent inflation undershoot as “good” and “in the right direction” but repeatedly flagged supply-shock risks, capacity constraints, wage pass-through and the “iron rod commitment” to keep expectations anchored, describing the labour market as still showing some tightness. Her earlier speech published 8 July framed supply shocks as creating genuine trade-offs but emphasised that monetary policy should tighten to offset demand-driven pressures and ensure inflation returns sustainably to target. Assistant Governor Christopher Kent’s remarks published 30 July and 29 June focused on the new framework for additional monetary policy tools at low interest rates, referencing pandemic-era cuts to the cash rate target as the main support delivered and stressing that the cash rate remains the primary instrument; the dovish tilt toward preparedness for easing was explicit but conditional on the policy rate first reaching very low levels.

The most recent communications therefore show the Governor maintaining a tightening bias while staff have begun to map out options for future easing scenarios, leaving the Board’s collective reaction function still skewed toward further increases if the new forecasts indicate that inflation will not return to target on current settings.

6. Scenarios

7. Into the meeting

The accompanying Statement on Monetary Policy will be the focal point, with its revised forecasts the first full update since May and the first to fold in the oil shock’s implications for the inflation trajectory. Any upward revision to the trimmed-mean path or slower projected return to the 2-3% band would be read as hawkish. Governor Bullock’s press conference at 15:30 AEST and the subsequent Q&A will be scrutinised for shifts in assessment of second-round risks, the nonlinearity of the Phillips curve, and whether the June language of increasing the cash rate target further if required is retained. Markets will focus on the precise wording around the balance of risks and any hint of changed reaction function. In the days immediately after, the July CPI released on 26 August will be the next major inflation print, followed by Q2 GDP on 2 September.

Full analysis on the RoboMacro site → /central-banks/RBA