The Reserve Bank of Australia kept its cash rate unchanged at 4.35% in a unanimous decision at its August 2026 meeting, in line with market expectations. Policymakers noted that financial conditions have tightened following three rate increases earlier this year and the economy is slowing as expected. Still, the Board noted that inflation remains too high, with capacity pressures contributing to the pickup in H2 2025, while higher oil and related commodity prices linked to the Middle East conflict are adding pressure. Higher fuel costs are also passing through to other goods and services, while short-term inflation expectations, though easing, remain elevated. Meanwhile, consumer spending growth is slowing, housing momentum has weakened and labour market conditions have eased more than expected.