The Reserve Bank of Australia (RBA) has held the cash rate steady at 3.60 per cent, following inflation figures that were higher than expected.

Headline inflation rose to 3.0 per cent in the year to August, up from 2.8 per cent in July—marking the highest annual rate since July 2024. This places inflation at the upper end of the RBA’s 2–3 per cent target range.

However, the RBA closely monitors underlying inflation measures. Its preferred indicator—the trimmed mean—eased slightly to 2.6 per cent, down from 2.7 per cent in the year to July.

Housing costs continue to be a key driver of inflation. Nationally, advertised property listings are around 20 per cent below average, while buyer demand remains strong. This imbalance is pushing prices higher, especially after three cash rate cuts this year totaling 0.75 percentage points.

RBA Governor Michele Bullock noted that households are unlikely to feel the full financial impact of recent rate cuts until 2026.

“We think of the lags to be 12 to 18 months, but we are seeing early signs it is having an impact in housing credit,” she said.

The next RBA decision is scheduled for 4 November, but the current ‘consensus’ is that interest rates aren’t likely to fall until well into 2026 - we’ll keep you updated.

Rick Maggi CFP, Financial Advisor Perth, Westmount Financial