Overview
- The RBA’s August minutes showed a divided nine‑member board that unanimously held the cash rate at 4.35% while warning that further tightening could be needed if upside inflation risks materialise.
- The Australian Bureau of Statistics’ July CPI, released Wednesday August 26, recorded headline inflation at 3.5% year‑on‑year while the RBA’s preferred trimmed mean stayed at 3.6% and rose 0.5% month‑on‑month, beating forecasts.
- RBA staff and board papers flagged clear upside channels for inflation such as higher oil prices linked to the Middle East and Strait of Hormuz disruption, a large award wage rise, stronger pass‑through of business costs and rapid AI‑related investment.
- Markets quickly repriced expectations after the core surprise, pushing the probability of at least one more rate rise before year‑end and making the RBA’s late‑September meeting a live possibility.
- Policymakers have said they will weigh the minutes, the next monthly CPI, labour‑market data and GDP before acting, which means borrowers face continued uncertainty over higher repayments if underlying inflation stays elevated.