The RBA Didn’t Say No
By: Niro Thambipillay
August 17, 2026
The Reserve Bank of Australia held the cash rate at 4.35% after three increases earlier in 2026. That decision did not mean the inflation fight was finished, and the RBA explicitly left the door open to another rise if upside risks materialise. In this article, I explain why the Board paused, what could trigger its next move, when economists expect the first cut, and why the period before rates fall may matter most for Australian property buyers.
TL;DR
The RBA held the cash rate at 4.35% because its three earlier increases are still slowing spending and working through the economy. It kept another rise on the table to prevent inflation expectations from becoming entrenched, but its own forecasts point to softer growth, slightly higher unemployment, and inflation returning to the 2% to 3% target band in the second half of 2027. Niro’s view is that rates have probably peaked and the next major property-market shift may begin before the first cut, as confidence returns while many buyers remain constrained by today’s borrowing capacity.
Key Takeaways
- The cash rate remains at 4.35%: The RBA held for a second consecutive meeting after three increases earlier in 2026.
- Inflation is still above target: Underlying inflation remains above the RBA’s 2% to 3% band, although it is moving lower.
- Another rise is still possible: The Board said it would increase the cash rate again if upside inflation risks materialise.
- The economy is weakening: The RBA expects unemployment to reach 4.5% by December, compared with 4.4% at the time discussed in the video.
- Cuts are not expected immediately: The RBA forecasts inflation returning to target in the second half of 2027, while NAB economists expect a first cut around mid-2027.
- Property confidence is already shifting: Auction results, open-home attendance, and clearance rates suggest some buyers are returning before borrowing capacity improves.
What Did the RBA Really Tell Us?
The headline was simple: the RBA did not raise the cash rate. The message underneath it was more complicated. The Board believes the three increases delivered earlier in the year are still working through household budgets, business activity, and spending decisions.
At the same time, it cannot declare victory while underlying inflation remains above its 2% to 3% target band. The hold was therefore a decision to wait for more evidence, not a promise that rates can never rise again.
1. Why the RBA Held at 4.35%
Interest-rate changes affect the economy with a delay. Higher repayments reduce disposable income gradually, fixed-rate loans reset at different times, and households do not change their spending all at once. The RBA acknowledged that the earlier tightening is still flowing through the economy.
Spending is slowing and economic momentum is cooling. Raising rates again before the full effect of the previous moves becomes visible could create more damage than necessary, particularly when inflation is already trending downward.
2. Why the RBA Refused to Rule Out Another Rise
The Board said it would do what is necessary, including increasing the cash rate further if upside risks materialise. That wording matters because declaring the hiking cycle finished could cause households and markets to behave as though cuts had already arrived.
If people become more confident, borrow more, and increase spending too early, inflation can become harder to return to target. Keeping the threat of another rise alive is part of the RBA’s attempt to restrain demand. It does not automatically mean another increase is the most likely outcome. For more context, see what higher inflation and renewed rate rises could mean for property.
3. What Would Trigger the Next Move?
Deloitte economist Stephen Smith pointed to the September-quarter inflation figures due in late October. If those numbers are unexpectedly strong, he sees a possible rise at the November meeting. That is the scenario the RBA is protecting itself against.
The other side of the decision is the weakening economy. The RBA lifted its December unemployment forecast to 4.5%, from the 4.4% level discussed in the video, and Australia is experiencing its longest stretch of economic growth below 2% since the early 1990s recession. Those conditions make further tightening increasingly difficult to justify unless inflation deteriorates materially.
4. When Could Interest Rates Finally Fall?
The RBA’s own forecasts place inflation back inside the 2% to 3% target band during the second half of 2027. National Australia Bank economists expect the first cut around mid-2027. On the timeline discussed in the video, that places a potential first cut roughly 10 to 15 months away.
Forecasts can change, and no date is guaranteed. The important shift is in the balance of risks: weaker growth and rising unemployment make cuts more plausible over time, while another increase would require a meaningful upside inflation surprise.
5. Property Confidence Is Moving Before Borrowing Capacity
Niro’s team heard from an Adelaide auctioneer who sold every property offered for the first time in 11 weeks. An agent in Sydney’s Sutherland Shire also reported more people at open homes and stronger auction energy. Domain’s national auction report showed clearance rates rising in the week before the RBA meeting.
This suggests confidence may be turning before loan serviceability improves. Banks still assess borrowers at an interest rate around three percentage points above the actual loan rate. When the first cut eventually arrives, buyer confidence and borrowing capacity could increase together, bringing more buyers with more money into a market that already has limited housing supply.
What Could This Mean for Australian Property?
Waiting for an official rate cut can feel safer, but it may also mean competing with everyone else who waited. Niro’s view, based on investing through multiple interest-rate cycles since 2002, is that the strongest opportunities often appear while uncertainty is still high and before the policy change becomes obvious.
That does not mean buying blindly. Some markets may surge, others may stall, and some could fall further. The outcome depends on local supply, affordability, employment, rental demand, and the quality of the individual property. Understanding how to choose the right areas to invest in matters more than trying to time one national headline.
What Buyers Should Do Now
The current window calls for preparation rather than panic:
- Review borrowing capacity now: Understand the bank’s serviceability buffer and how a future cut could affect your budget.
- Research at suburb level: Focus on supply, employment, affordability, rental demand, and planned construction rather than relying on national forecasts.
- Maintain a safety buffer: A possible future cut is not guaranteed and should not be required for the investment to remain affordable.
- Negotiate while competition is lower: Nervous sellers and sidelined buyers can create better conditions for due diligence and price negotiation.
The RBA did not promise that rates have peaked, but its forecasts suggest the economy is moving closer to the point where cuts become more likely than further increases. Property markets may respond before that decision is officially announced.
Summary
- The RBA held the cash rate at 4.35% after three increases earlier in 2026
- Underlying inflation remains above the 2% to 3% target band, but it is moving downward
- Another increase remains possible if upside inflation risks materialise
- The RBA expects unemployment to reach 4.5% by December, while economic growth remains weak
- The RBA expects inflation back inside its target band in the second half of 2027, and NAB economists forecast a first cut around mid-2027
- Auction activity and buyer attendance suggest confidence is already beginning to improve in some markets
- A future cut could lift confidence and borrowing capacity simultaneously, so selective buyers may find better opportunities before competition fully returns
Frequently Asked Questions
Buying before the first cut can provide less competition and better negotiating conditions, but only when the property, location, finance, and personal safety buffer are suitable. Not every market will perform the same, so buyers should not rely on a future rate cut to make an investment affordable.
A rate cut can improve buyer confidence and increase borrowing capacity because banks assess loans using a serviceability buffer above the actual interest rate. If more buyers return with larger budgets while housing supply remains constrained, competition and property prices can strengthen.
The RBA held because the three rate increases delivered earlier in 2026 are still working through household spending and the wider economy. Underlying inflation remains above the 2% to 3% target band, but it is moving lower, so the Board chose to wait for more evidence before tightening again.
The RBA forecasts inflation returning to its 2% to 3% target band in the second half of 2027, while NAB economists expect the first cut around mid-2027. In the timeline discussed in the video, that is roughly 10 to 15 months away, although forecasts can change.
Yes. The RBA said it would increase the cash rate further if upside inflation risks materialise. However, weaker economic growth and the forecast rise in unemployment make another increase less likely unless incoming inflation data is materially stronger than expected.
About the Author
Niro Thambipillay
Niro is the founder of Investment Rise, one of Australia’s most trusted property buyers agencies. He has helped hundreds of first-time investors build property portfolios and was voted one of the most trusted Real Estate entrepreneurs in the Asia Pacific region (APAC 2022). Niro is also the author of “How to Build a Property Portfolio That Pays You an Income Every Month.”
