After three rate rises this year, the Reserve Bank finally sat on its hands. At its August meeting the board held the cash rate at 4.35%, and almost nobody flinched — markets had priced the "no change" call at 97% going in. The hold itself was never the story. What happens next is.
Here's the board's logic, stripped of the central-bank fog: policy is now "somewhat restrictive," the economy is slowing roughly on schedule, but inflation is still sitting higher than they'd like. On the RBA's own numbers, it won't drift back toward the middle of the target band until late 2027 — and even that comes with a warning label about upside risk. So they're doing the sensible thing: waiting, watching the data, and leaving the door to another hike propped open just in case.
Where it gets interesting is the disagreement among the people paid to forecast this stuff.
One camp reckons the tightening is essentially done. Vanguard, Westpac, HSBC and T. Rowe Price all point to the same picture — softer inflation, a cooling jobs market, and falling house prices quietly doing the RBA's work for it. In their view, we're in for an extended stretch of rates staying put, with the next move (a cut) more likely a 2027 conversation than a 2026 one.
The other camp isn't buying the all-clear. BlackRock and RBC BlueBay both flag one more possible hike before year's end. Their reasoning is almost tactical: the moment the RBA signals it's finished, financial conditions loosen on their own — cheaper credit, revived confidence — which risks undoing the very restraint they've spent all year building. Add lingering uncertainty out of the Middle East and its potential to nudge inflation, and they'd rather the board keep swinging than declare victory early.
So what does this actually mean for you?
If you're carrying a mortgage, no news is good news — but don't build your budget around cuts arriving soon. Even the optimists are talking about relief in 2027, not this Christmas. If you're a saver, your term deposits and cash holdings keep their shine a while longer; there's no rush to lock away long or chase yield.
The common thread across every forecaster, dove or hawk, is this: restrictive for longer, not looser sooner.
That's the posture we're planning around. Structure your debt and your cash flow for rates holding roughly where they are — not for a rescue that the RBA has made fairly clear isn't on the way. If your circumstances have shifted, or you'd like to pressure-test your position against a "higher for longer" world, let's have a conversation.
Rick Maggi, CFP, Financial Advisor - Perth
This is general information only and doesn't take your personal circumstances into account.