Monetary Policy Decision

Media Conference – 11 AUGUST 2026

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Decision
The cash rate target was unchanged at 4.35 per cent. The policy decision was unanimous.

Inflation
The headline inflation is too high, and underlying inflation also remains elevated. Energy and most related commodity prices stay above where they were prior to the conflict in the Middle East. Disruption to global oil supply is adding directly to inflation, and higher fuel costs are passing through to a wider range of goods and services, keeping inflation high for now. Firms experiencing higher input costs are increasing the prices of their goods and services, with more expected to follow. Short-term measures of inflation expectations have eased, yet they are anticipated to anchor above target and remain higher than earlier in the year.

Economic and Labour Market Conditions
Economic conditions have tightened this year following three increases in the cash rate target. Government bond yields have risen, and the exchange rate has appreciated. Growth in consumer spending is slowing gradually as expected. Housing market momentum has softened, with prices declining across several capital cities and a noticeable drop in new housing loans. Labour market conditions remain resilient overall, while leading indicators suggest that any further rate cuts are likely to be limited in the near term. Looking forward, resolution of conflict in the Middle East remains inconclusive, with heightened uncertainty around inflation pressure and weaker economic activity. Prolonged uncertainty may also reduce growth in Australia’s major trading partners.

Monetary Policy Stance
The Board remains focused on preventing high inflation from becoming embedded. Achieving this requires the cash rate target to remain restrictive. The Board will take any action it considers necessary to achieve this outcome, including further increases in the cash rate target if required.