RBA Holds at 4.35% — Unanimous Decision, But August Is Still Live

The Reserve Bank of Australia has held the cash rate at 4.35% at its June 16 meeting — the first pause after three consecutive hikes in 2026. The decision was unanimous and widely expected: all four major banks forecast a hold, and 42 of 45 economists surveyed by Reuters agreed. But the Board's statement did not signal the end of the tightening cycle. The RBA flagged it will increase rates "further if required" and noted inflation remains too high. At the same time, a US-Iran peace deal has seen the Strait of Hormuz begin to reopen — the same oil supply shock that drove much of 2026's inflation — and markets are currently pricing roughly a 50% chance of one more hike, sitting notably above the consensus of three of four major banks. Here's what the statement said, what it means for August, and what borrowers should do now.

What the Board Decided

The RBA Board voted unanimously to hold the cash rate at 4.35% on 16 June 2026, announced at 2:30pm AEST. The unanimous result is notable — the May decision to hike was 8–1, with one Board member voting to hold. Today, all nine members agreed a pause was appropriate.

The Board's key explanation from the statement:

Three Reasons for the Hold

The statement pointed to three distinct reasons for pausing:

The Board was clear this is not a signal the job is done. Inflation "is likely to remain high for some time" as earlier fuel price increases continue to pass through to other goods and services.

The Strait of Hormuz — Why This Changes the Outlook

The single most important development since the May hike is the US-Iran peace deal and the beginning of the Strait of Hormuz reopening. The Strait — through which approximately 20% of global petroleum liquids flow — was disrupted for around eight weeks, triggering the fuel price spike that drove headline CPI to 4.6% in March and kept inflation elevated through April.

The RBA's own May Statement on Monetary Policy had forecast headline inflation peaking at 4.8% in the June quarter specifically because of this supply shock. If the Strait reopens fully over coming weeks and global oil prices continue falling, that forecast — and the case for further hikes — weakens materially.

This is partly why three of four major banks now call 4.35% as the peak, and why market pricing for one more hike — at roughly 50% — sits notably above the bank consensus rather than below it.

What the Statement Means for August

The RBA closed the statement with an explicit warning:

That language keeps August live. But "if required" is doing real work here — it's conditional, not a forecast. Whether August brings a hike or another hold depends primarily on two data releases:

• May monthly CPI: due 24 June 2026 — the first major inflation print after today.
• June quarter CPI: due approximately 30 July 2026 — the single most important release before the 10–11 August meeting.

If the Strait of Hormuz reopening flows through to lower fuel prices in the May and June data, the trimmed mean — currently 3.4% and above the RBA's 2–3% target — could ease faster than expected. That would cement the view held by CBA, ANZ, and NAB that the cycle has peaked at 4.35%. If inflation stays sticky despite easing oil prices, Westpac's two-hike scenario remains plausible.

Where the Banks Stand Now

Three of four major banks now forecast 4.35% as the peak rate. Westpac remains the only major bank forecasting further hikes:

CBA's Head of Australian Economics Belinda Allen confirmed today: "We maintain this view and continue to flag our call of two rate cuts in 2027 based on our outlook for growth, inflation and unemployment."

NAB chief economist Sally Auld, whose team revised their forecast on 9 June: "The next move in the cash rate is likely to be down, but the timing is uncertain."

ANZ confirmed its peak call, while acknowledging the risk of an August hike if the June quarter CPI surprises to the upside — the clearest acknowledgement from any of the three peak-callers that the cycle may not be over.

Westpac's Imre Speizer remained the outlier today: "It'll be about the little clues as to whether the cycle is over or it's still alive — that's going to be really important for both the Aussie and the kiwi markets." Westpac's two-hike forecast — August and September to 4.85% — remains conditional on the inflation data.

Market pricing at ~50% for one more hike sits notably above what three of four major banks are forecasting — reflecting the genuine uncertainty around whether the Strait of Hormuz resolution will be fast enough to pull inflation down before August.

What This Means for Your Mortgage

Today's hold means no immediate repayment change. The table below shows where repayments stand now — and what each August scenario would add:

A hold today is a reprieve. If the Strait of Hormuz reopening eases inflation quickly enough, CBA, ANZ, and NAB's "peak is in" scenario plays out — and today's level becomes the ceiling. If inflation stays sticky despite easing oil prices, the market's 50% chance of one more hike becomes real — and repayments on a $600,000 loan rise by a further $180/month from today.

What Borrowers Should Do Now

Written by Amit Narang, Mortgage Broker | Credit Representative 558902 of Outsource Financial Pty Ltd (ACL 384324)

Sources: RBA, Statement by the Monetary Policy Board, 16 June 2026; RBA, Statement on Monetary Policy, May 2026; ABS, Australian National Accounts, Q1 2026; ABS, Monthly CPI Indicator, April 2026; ABS, Labour Force Survey, April 2026; CBA Economics (Belinda Allen), post-decision commentary, 16 June 2026; NAB Economics (Sally Auld), post-decision note, June 2026; ANZ Research, post-statement commentary, June 2026; Westpac IQ (Imre Speizer), post-decision note, June 2026.