Independent RBA rate analysis · evidence brief

Three hikes, then a pause: the public data lean HOLD for the RBA’s August decision

The Reserve Bank raised the cash rate three times between February and May, then paused in June to assess the pass-through of earlier tightening. Our independent ten-driver framework finds the public data still consistent with that pause, though with little margin: inflation and credit keep the balance of risks tilted toward a further increase, while easing inflation momentum and a stronger Australian dollar provide the principal offsets.

By RateWatch Research · a Not A Tech Guy projectPublished 11 July 2026Next RBA decision: 11 August 2026, 2:30pm AEST
Framework readingHOLD4.35%

The pressure score is approximately +0.25, versus an assumed hike boundary of +0.31. The distance is about 0.06. The boundary is a design choice, not an estimated RBA trigger.

Cash rate4.35%RBA · 9 Jul 2026
Headline CPI4.0%ABS · May 2026
Trimmed mean3.6%ABS · May 2026
Unemployment4.4%ABS · May 2026
Wage growth3.3%ABS · Mar quarter 2026

The question we set out to answer

The RBA raised the cash rate three times in the first half of 2026, then paused at 4.35% in June to assess how those increases were flowing through demand and how the global oil shock was affecting inflation. That left a live question for the 10–11 August meeting: has inflation pressure remained strong enough to justify another increase, or is the previous tightening doing enough?

We compile the latest available RBA and ABS observations, record their release dates and source hashes, map ten policy-relevant channels into a common pressure score, and subject the same decision rule to sixteen adverse and benign scenarios. TimesFM is excluded from the decision reading. The result leans HOLD, approximately 0.06 below the framework’s assumed hike boundary.

The exercise is a disciplined organisation of public evidence — not a reconstruction of the confidential RBA staff forecast or the Board’s deliberations.

Inflation is still the central risk

Headline inflation eased to 4.0% in May, while the ABS trimmed-mean measure rose to 3.6%. That combination matters: the headline rate cooled, but underlying inflation remained above the RBA’s 2–3% target band.

Inflation before the August 2026 RBA meeting
Latest observation May 2026Horizon observed historyFrequency monthlyMeeting-aligned noRole official evidence
Official ABS headline and trimmed-mean inflation, alongside the model’s persistent-inflation composite.
2%3%4%Apr ’25Jul ’25Sep ’25Dec ’25Feb ’26May ’26Headline 4.0%Persistent 3.8%Trimmed 3.6%
Monthly CPI — headlineMonthly CPI — trimmed meanPersistent-inflation composite
Panel-specific y-axis: compare labelled values, not line angles.
View latest 18 plotted periods as table
Inflation before the August 2026 RBA meeting. Latest 18 plotted periods.
PeriodMonthly CPI — headlineMonthly CPI — trimmed meanPersistent-inflation composite
May 20264.0%3.6%3.8%
Apr 20264.2%3.4%3.6%
Mar 20264.6%3.3%3.6%
Feb 20263.7%3.3%3.7%
Jan 20263.8%3.3%3.7%
Dec 20253.8%3.3%3.7%
Nov 20253.4%3.2%3.5%
Oct 20253.8%3.3%3.7%
Sep 20253.6%3.2%3.5%
Aug 20253.2%3.0%3.3%
Jul 20253.0%3.0%3.3%
Jun 20251.9%2.8%2.9%
May 20252.1%3.0%3.1%
Apr 20252.4%3.2%3.4%
Source: https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/may-2026

How this reading compares with the market and benchmark rules

No single reading — including ours — should be taken in isolation. Standard practice is triangulation: compare a model-based reading against market pricing and mechanical benchmark rules, and ask whether any disagreement can be explained.

Market pricing · ASX RBA Rate Tracker78% no change priced

Implied from 30 Day Interbank Cash Rate Futures as of 1 July 2026: 78% no change, 22% a change at the next meeting. This is a genuine market-implied probability (the feed does not separate hike from cut). It currently agrees with our HOLD lean.

Adapted Taylor-rule benchmarkLeans HIKE

A fixed-coefficient Taylor benchmark mechanically prescribes a higher rate while inflation sits this far above target. We report the divergence rather than hide it: the ten-driver framework holds because momentum, expectations and transmission evidence temper the raw inflation gap. Experimental benchmark only.

Bond-market sensitivity proxyLeans HOLD

A directional proxy built from RBA government-bond yields, not an extracted cash-rate path. It sits with HOLD, consistent with the 2-year yield trading close to the cash rate.

This framework · ten scored driversHOLD at 4.35%

Uncalibrated pressure score +0.25 against an assumed +0.31 hike boundary. The score shares behind the benchmark leans above are normalised heuristics, not probabilities; only the ASX row is market-implied.

Market pricing source: ASX RBA Rate Tracker. Benchmark leans are computed by the same pipeline and carry the statuses shown in the data file.

HOLD 4.35%Score +0.25 / +0.31Market 78% no changeRight now:Infl 3.8%Mom 3.2%Unemp 4.4%Wages 3.3%AUD +4.3% 6m

Sixteen scenarios test both sides of the decision

The same weights and thresholds are applied to every stress test: 7 HOLD, 6 HIKE and 3 CUT. The nearest hike state is Domestic activity reacceleration; the nearest cut state is Household balance-sheet squeeze. Each scenario is a deterministic sensitivity, not a probability-weighted forecast; the live baseline beneath the library shows today’s observed state on the same axes for comparison.

All 16 stress tests

Sixteen scenario models, side by side

Every column uses the same ten weights and the same decision thresholds.

HOLD7 scenarios · rate unchanged
  1. 01+0.30
    Stagflation
    Inflation↑ 4.2%Unemployment↑ 4.9%Wages↑ 4.0%Cash-rate reaction→ 4.35% HOLD
    3%4%5%Jan ’25Aug ’264.4% → 4.9%4.35% → 4.35%3.8% → 4.2%3.3% → 4.0%AUD assumed -8.0% (6m)Momentum assumed 4.8% annualised
    HOLD4.35%
  2. 02+0.05
    Soft landing on track
    Inflation↓ 3.3%Unemployment↑ 4.5%Wages↓ 3.2%Cash-rate reaction→ 4.35% HOLD
    3%4%Jan ’25Aug ’264.4% → 4.5%4.35% → 4.35%3.8% → 3.3%3.3% → 3.2%AUD assumed +5.0% (6m)Momentum assumed 2.8% annualised
    HOLD4.35%
  3. 03-0.24
    Disinflation + labour cracks
    Inflation↓ 2.9%Unemployment↑ 4.8%Wages↓ 2.9%Cash-rate reaction→ 4.35% HOLD
    3%4%5%Jan ’25Aug ’264.4% → 4.8%4.35% → 4.35%3.8% → 2.9%3.3% → 2.9%AUD assumed +3.0% (6m)Momentum assumed 1.8% annualised
    HOLD4.35%
  4. 04+0.12
    High inflation, momentum cooling
    Inflation↑ 4.0%Unemployment→ 4.4%Wages↓ 3.2%Cash-rate reaction→ 4.35% HOLD
    3%4%Jan ’25Aug ’264.4% → 4.4%4.35% → 4.35%3.8% → 4.0%3.3% → 3.2%AUD assumed +4.0% (6m)Momentum assumed 2.0% annualised
    HOLD4.35%
  5. 05+0.17
    False dawn: lower level, hotter momentum
    Inflation↓ 2.9%Unemployment→ 4.3%Wages↑ 3.4%Cash-rate reaction→ 4.35% HOLD
    3%4%Jan ’25Aug ’264.35% → 4.35%4.4% → 4.3%3.3% → 3.4%3.8% → 2.9%AUD assumed -2.0% (6m)Momentum assumed 4.2% annualised
    HOLD4.35%
  6. 06+0.02
    Supply-side disinflation, jobs intact
    Inflation↓ 2.9%Unemployment→ 4.4%Wages↑ 3.4%Cash-rate reaction→ 4.35% HOLD
    3%4%Jan ’25Aug ’264.4% → 4.4%4.35% → 4.35%3.3% → 3.4%3.8% → 2.9%AUD assumed +4.0% (6m)Momentum assumed 2.2% annualised
    HOLD4.35%
  7. 07+0.22
    Inflation sticky, activity weakening
    Inflation↑ 4.0%Unemployment↑ 4.8%Wages↑ 3.8%Cash-rate reaction→ 4.35% HOLD
    3%4%5%Jan ’25Aug ’264.4% → 4.8%4.35% → 4.35%3.8% → 4.0%3.3% → 3.8%AUD assumed -3.0% (6m)Momentum assumed 4.1% annualised
    HOLD4.35%
HIKE6 scenarios · higher-rate pressure
  1. 01+0.66
    Overheating boom
    Inflation↑ 4.0%Unemployment↓ 4.1%Wages↑ 4.4%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%3.3% → 4.4%4.4% → 4.1%3.8% → 4.0%AUD assumed +2.0% (6m)Momentum assumed 4.9% annualised
    HIKE4.60%
  2. 02+0.41
    Oil shock, round two
    Inflation↑ 4.3%Unemployment↑ 4.5%Wages↑ 3.4%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%4.4% → 4.5%3.8% → 4.3%3.3% → 3.4%AUD assumed -4.0% (6m)Momentum assumed 5.5% annualised
    HIKE4.60%
  3. 03+0.49
    Wage breakout, unemployment steady
    Inflation→ 3.8%Unemployment↓ 4.3%Wages↑ 4.5%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%3.3% → 4.5%4.4% → 4.3%3.8% → 3.8%AUD assumed +4.7% (6m)Momentum assumed 4.3% annualised
    HIKE4.60%
  4. 04+0.36
    Terms-of-trade boom with domestic spillover
    Inflation↓ 3.4%Unemployment↓ 4.2%Wages↑ 3.8%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%4.4% → 4.2%3.3% → 3.8%3.8% → 3.4%AUD assumed +10.0% (6m)Momentum assumed 3.6% annualised
    HIKE4.60%
  5. 05+0.53
    Domestic activity reacceleration
    Inflation↑ 3.9%Unemployment↓ 4.2%Wages↑ 3.9%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%4.4% → 4.2%3.8% → 3.9%3.3% → 3.9%AUD assumed +1.5% (6m)Momentum assumed 4.3% annualised
    HIKE4.60%
  6. 06+0.35
    AUD depreciation shock
    Inflation↑ 3.9%Unemployment↑ 4.5%Wages↑ 3.5%Cash-rate reaction↑ 4.60% HIKE
    3%4%Jan ’25Aug ’264.35% → 4.60%4.4% → 4.5%3.8% → 3.9%3.3% → 3.5%AUD assumed -12.0% (6m)Momentum assumed 4.5% annualised
    HIKE4.60%
CUT3 scenarios · lower-rate pressure
  1. 01-0.52
    Recession scare / global risk-off
    Inflation↓ 2.4%Unemployment↑ 5.3%Wages↓ 2.2%Cash-rate reaction↓ 4.10% CUT
    2%3%4%5%Jan ’25Aug ’264.4% → 5.3%4.35% → 4.10%3.8% → 2.4%3.3% → 2.2%AUD assumed -6.0% (6m)Momentum assumed 0.5% annualised
    CUT4.10%
  2. 02-0.35
    Household balance-sheet squeeze
    Inflation↓ 2.8%Unemployment↑ 4.9%Wages↓ 2.8%Cash-rate reaction↓ 4.10% CUT
    3%4%5%Jan ’25Aug ’264.4% → 4.9%4.35% → 4.10%3.8% → 2.8%3.3% → 2.8%AUD assumed +2.0% (6m)Momentum assumed 1.5% annualised
    CUT4.10%
  3. 03-0.40
    External slowdown and commodity slump
    Inflation↓ 2.6%Unemployment↑ 5.0%Wages↓ 2.7%Cash-rate reaction↓ 4.10% CUT
    3%4%5%Jan ’25Aug ’264.4% → 5.0%4.35% → 4.10%3.3% → 2.7%3.8% → 2.6%AUD assumed -5.0% (6m)Momentum assumed 1.0% annualised
    CUT4.10%
16/16score calculations reproduced
1.000weight sum
31/31automated source-integrity checks
±0.31design-assumption hold boundary

Reproduction confirms arithmetic and recorded-source integrity only. It does not establish predictive accuracy. These are deterministic sensitivities, not probabilities, causal estimates or an RBA forecast.

Live baseline after the scenario library
4.35% cash rate3.78% model persistent-inflation composite3.6% monthly trimmed-mean indicator3.2% 3-month persistent-composite pace, annualised4.4% unemployment (model full-employment assumption 4.6%; not a trigger)3.3% wage growth (model benchmark 3.5%)+4.3% AUD trade-weighted, 6 months

The 4.6% comparison is a model assumption, not an official trigger. Source and RBA uncertainty caveat.

Live baseline · ten-driver policy model

Today’s ten inputs, unchanged

3%4%Jan ’25Jun ’264.4% → 4.4%4.35% → 4.35%3.8% → 3.8%3.3% → 3.3%

Every stress test above changes the displayed macro state and five explicit context drivers, then runs the same weights and hold thresholds used for this baseline.

31/31 source and derivation checks passed
Cash rate target4.35%2026-07-09 · SHA 1761cbb3949c…2-year government bond4.49%2026-07-08 · SHA b425fc9f1295…Monthly CPI indicator — headline y/y4.0%2026-05 · SHA 660374da201e…Monthly CPI indicator — trimmed mean y/y3.6%2026-05 · SHA 660374da201e…Weighted median CPI y/y3.6%2026-05 · SHA 660374da201e…Services CPI y/y3.7%2026-05 · SHA 660374da201e…Non-tradables CPI y/y4.7%2026-05 · SHA 660374da201e…Unemployment rate4.36%2026-05 · SHA 5120cbc8a70e…Employment14,738.84 thousand persons2026-05 · SHA 5120cbc8a70e…Hours worked2,010,382.41 thousand hours2026-05 · SHA 461531745fcf…Underutilisation10.64%2026-05 · SHA 185c119357a6…Job vacancies329.5 thousand positions2026-Q2 · SHA 8ba45e6a08f4…Wage Price Index y/y3.3%2026-Q1 · SHA 23e8a2549753…Private-sector WPI y/y3.2%2026-Q1 · SHA 23e8a2549753…Average weekly ordinary-time earnings$2,051.10 per week2025-11 · SHA edf2222f2dd0…GDP per hour worked99.6 index2026-Q1 · SHA 39439cfd464c…Nominal unit labour cost108.7 index2026-Q1 · SHA e8734e4adb6d…Real GDP quarterly growth0.3%2026-Q1 · SHA 39439cfd464c…Domestic final demand quarterly growth1.0%2026-Q1 · SHA 7cbc4685f428…Household consumption quarterly growth0.5%2026-Q1 · SHA 7cbc4685f428…Private business investment quarterly growth6.0%2026-Q1 · SHA 7cbc4685f428…Owner-occupier housing credit$1,746.97bn2026-05 · SHA d7a73d79258d…Non-financial business credit$1,405.86bn2026-05 · SHA d7a73d79258d…Housing credit annual growth7.33%2026-05 · SHA d7a73d79258d…Investor housing credit annual growth9.70%2026-05 · SHA d7a73d79258d…Non-financial business credit annual growth9.86%2026-05 · SHA d7a73d79258d…Market economists' 2-year inflation expectations2.6%2026-Q2 · SHA 875896ca0871…10-year break-even inflation2.27%2026-Q2 · SHA 875896ca0871…RBA commodity price index106.05 index2026-06 · SHA 718b1d5a3b86…Automotive fuel inflation7.7%2026-05 · SHA 8a93c2f7bd80…AUD trade-weighted index65.1 index2026-07-10 · SHA 1775e5523b45…

Does the RBA really look at these ten inputs?

Broadly, yes. Mechanically, no. The RBA has no published rule saying these ten variables are required or that they receive fixed weights. Its mandate is price stability and full employment, and staff brief the Board on Australian and global conditions, financial markets, forecasts and risks. The June decision itself discussed inflation, expectations, labour, demand, investment, credit, bond yields, the exchange rate, commodities and global risks.

Inflation level, persistence and expectations

Direct mandate evidence

Central to the 2–3% inflation objective and the outlook for inflation. Our level, momentum and expectations inputs sit within one 45% inflation block to make the overlap explicit.

Labour market and wages

Direct mandate evidence

Relevant to full employment, capacity pressure and services inflation. Our unemployment-gap input is only a proxy; the RBA uses a broad labour information set and says full employment is not directly observable.

Domestic demand and capacity

Direct outlook evidence

Consumption, investment, GDP and capacity conditions shape the inflation and employment outlook. Our domestic-activity score compresses several releases into one channel.

Credit, market rates and the Australian dollar

Transmission evidence

The RBA monitors credit availability, bond yields, funding and lending conditions, and the exchange rate. These indicators help assess whether policy is transmitting; none is decisive alone.

Commodities and global risks

Conditioning evidence

Energy and commodity shocks affect inflation, income and activity. Our commodity input is deliberately small and cannot represent the RBA’s full global forecast.

Forecasts, liaison and Board judgement

Not reproduced

The RBA also uses staff forecasts, business and community liaison, fiscal and public-demand analysis, productivity, detailed lending conditions, asset markets and judgement. These are material omissions from the score.

Assessment based on the RBA’s monetary-policy framework, June 2026 decision, Statement on Monetary Policy process and published description of Board briefings.

Why the framework currently leans hold

The model combines ten policy-relevant drivers using fixed weights that sum to 1.000. The largest hike-side contribution is the level of inflation. Credit growth and domestic activity add smaller amounts of tightening pressure.

Inflation level+0.213
Credit growth+0.038
Domestic activity+0.030
Inflation momentum-0.043
Australian dollar-0.012

These offsets are sufficient to keep the combined score below the hike boundary today; they are not sufficient to eliminate the upside risk to inflation.

What could change the call before 11 August

The decision is conditional on data available by the model lock. Four scheduled releases can update scored or contextual inputs before the meeting:

  1. Labour Force, AustraliaJune 2026 · labour
  2. Consumer Price Index, AustraliaJune 2026 · inflation
  3. International Trade Price Indexes, AustraliaJune 2026 · external context only
  4. Monthly Household Spending IndicatorJune 2026 · domestic activity / consumption

A stronger inflation or demand print could move the score above the assumed +0.31 boundary. A material deterioration in labour conditions, consumption or external demand could move it toward the assumed -0.31 cut boundary.

Method, reproducibility and limits

The reproduction panel beneath the scenario library is the audit trail: every scenario score recomputes from the published weights, and every input traces to a hash-verified official file. Those checks establish data lineage and arithmetic consistency — they do not establish forecast accuracy, which only the public ledger of meeting outcomes can.

Formally, each driver i is mapped to a bounded score si ∈ [−1, +1] from its official observations, and the composite is the weighted sum S = Σ wi·si with fixed weights that sum to one (inflation block 45%, labour and wages 33%, activity 10%, financial and external conditions 12%). The decision rule is: HIKE if S > +0.31, CUT if S < -0.31, otherwise HOLD. Today S = +0.25.

The framework is not a statistically calibrated probability model or a causal estimate of RBA behaviour. Its weights, transformations and ±0.31 hold band are design assumptions, stated before the outcome and held fixed between meetings. TimesFM is a separate appendix experiment and does not enter this score.

One-weight test20/20 remain HOLD

Each driver weight is changed by ±25% and all weights are renormalised. Scores range from 0.21 to 0.28.

Boundary testCall flips below +0.25

The published +0.31 hike boundary is not estimated from historical Board decisions. Alternative boundaries can change the call.

Leave-one-out test1 of 10 changes the call

Removing the inflation-momentum offset changes the reading to HIKE; this identifies a decisive modelling choice.

Live track recordNo completed outcome yet

The August call is preregistered, but there is not yet an out-of-sample meeting result. Predictive skill is therefore unestablished.

Where this method sits in the literature

Scoring official data into a policy-pressure reading is a monetary-policy reaction function — a well-studied idea, not an invention of this site. Situating the framework honestly: it is a fixed-weight, preregistered variant of that tradition, far simpler than the models central banks actually run.

Conclusion: on the current evidence, a hold — conditional on the July data

The most defensible reading of the public evidence on 11 July is that the RBA can hold at 4.35% in August while it assesses the effect of earlier increases. The call is close because inflation remains too high and domestic demand has not weakened decisively. A stronger June inflation or spending result could push this framework into HIKE; a material labour or demand deterioration would strengthen the case for HOLD and eventually CUT.

The reading should therefore be taken as HOLD, with a live upside risk. The contribution of the exercise is not certainty but transparency: every input, assumption, threshold and failure condition is stated before the outcome is known.

Common questions about Australia’s next interest rate decision

When is the next RBA interest rate decision?

The Reserve Bank of Australia announces its next cash rate decision at 2:30pm AEST on Tuesday 11 August 2026, at the end of its 10–11 August Monetary Policy Board meeting, alongside a quarterly Statement on Monetary Policy with updated forecasts.

Will interest rates go up in Australia in August 2026?

Our independent ten-driver framework currently reads the public data as HOLD at 4.35%, about 0.06 below its assumed hike boundary, and ASX cash rate futures priced about a 78% chance of no change as of 1 July 2026. The hike risk is live: a strong June-quarter CPI result on 29 July could change this reading. This is an uncalibrated framework reading, not a guarantee and not financial advice.

What is the current cash rate in Australia?

The RBA cash rate target is 4.35%. It was last raised on 6 May 2026, the third 0.25 percentage point increase of 2026, and the RBA held it unchanged at its June meeting.

What would make the RBA raise interest rates again?

The main upside risks before 11 August are the June Labour Force release (23 July), the June-quarter Consumer Price Index (29 July) and the monthly household spending indicator (4 August). A stronger inflation or demand result in those releases would push this framework's pressure score above its hike boundary.

Could the RBA cut interest rates instead?

A cut looks distant on current data. In our sixteen stress tests, cut outcomes only appear when unemployment rises toward 5% and inflation falls back inside the 2–3% target band — a material deterioration from today's readings. The nearest cut scenario is a household balance-sheet squeeze.

Primary sources

Publication and correction policy

Status: independent personal research; not commissioned, sponsored or externally peer reviewed. No employer, RBA, ABS or Australian Government affiliation or endorsement is claimed.

Author and contact: published by Not A Tech Guy. Questions, corrections and methodological challenges are welcome: notatechguy@agentmail.to. Substantive challenges that change a published number will be credited in the correction note.

Versioning: this page identifies the observation dates, generation time and model version. Material corrections are made in place with the modified timestamp updated. Historical preregistered meeting calls are retained rather than rewritten after the outcome.

Scheduled review: the reading is provisional until the June labour-force, June CPI and household-spending releases listed above are ingested. The article must be refreshed after those releases before final pre-meeting promotion.

Disclosure: Independent personal research; not externally peer reviewed, financial advice, or affiliated with an employer, the Reserve Bank of Australia, the Australian Bureau of Statistics or the Australian Government. Model version ad43c46c19e4d76e; data generated 11/07/2026, 6:17:56 pm AEST.