Talk of interest rates has reached a fever pitch as the Reserve Bank of Australia's (RBA) next monetary policy meeting draws closer, with markets increasingly focused on what the central bank will do next.
The nation's central bank has already lifted the official cash rate (OCR) three times in 2026, taking it to the current rate of 4.35%. In June, the bank opted to hold, despite ongoing inflationary pressures. The reasoning was that policymakers needed more time to assess how the previous three rate hikes were flowing through the economy before making another move.
Since then, market players have been split on the RBA's next direction as conflicting market pressures cloud the outlook. Sticky inflation, rising wages, relatively low unemployment and ongoing global uncertainty are all pulling the economic picture in different directions, making the path for interest rates harder than ever to predict.
In this multi-part series, Australian Broker asked industry participants, including brokers and lenders, to place their bets on the RBA's next move.
Franchise owner and mortgage broker at Mortgage Choice — Parkside in South Australia
"I am leaning towards a rate rise mostly due to economists at a couple of the major banks indicating this: no positive feedback towards a rate cut and inflation is still not where the RBA wants it to be.
Obviously, the market is reeling from the government decision on negative gearing. And the possibility of rate increase is also on everyone's mind. We have reached a plateau of maximum borrowing for a lot of clients, and therefore, the threat of another rate rise is making them very cautious and holding off on purchasing."
Chief executive officer of non-bank lender Rate Money
"While there's no shortage of debate in the market, I believe the Reserve Bank has already done a significant amount of heavy lifting through this year's rate increases and may want more time to assess how those higher borrowing costs are flowing through households and businesses before making another move. Inflation remains above the RBA's target, which remains a key concern. And if it proves more persistent than expected, I am sure the RBA will be prepared to raise rates again.
From a housing finance perspective, we're seeing borrowers become increasingly accustomed to a higher interest rate environment. Activity hasn't stopped, but rather become more considered. Borrowers are taking longer to make decisions, seeking more advice and placing greater importance on loan structure and flexibility rather than simply chasing the lowest rate."
Managing director at Melbourne-based Loan Studio
"I think the RBA will hike in August, another 25 basis points. I don't buy the idea that June was the top. I know three of the four majors are calling a hold. But I think the hold case is built on the wrong data. Everyone points to how much pain households are in, and that's real; consumer sentiment is about as low as it's ever been. But the RBA has said plainly that demand needs to slow to get inflation down. Weak spending is what they're trying to achieve. It's not a reason for them to stop.
Meanwhile, the numbers the board actually cares about are going the wrong way. Trimmed mean inflation went from 3.4% to 3.6% in May, and the shorter-run momentum measures are picking up too. And a lot of the improvement in headline inflation is the fuel excise cut, which runs out at the end of July. That support disappears basically the same week the board meets. The thing that seals it for me is the second-round effects. Services prices are starting to rise off the back of energy costs, which is exactly what the RBA said it was worried about in the June statement. When a central bank tells you what would force its hand — and then the data serves it up — I take them at their word."
Founder and managing director of Sydney-based FinStreet
"Our view at FinStreet is that the RBA is more likely to hold the cash rate at 4.35% at its August meeting, while maintaining a clearly hawkish bias. The RBA has already delivered three rate increases this year, and the full impact of those increases is still working its way through household cash flows, borrowing capacity and business conditions. In our view, the board has reason to allow more time to assess that transmission before tightening again.
That said, inflation remains the key risk. Higher energy prices and ongoing geopolitical uncertainty could continue to feed through to transport, construction, goods and broader business costs. If those pressures become more persistent or begin to lift inflation expectations, another rate increase remains a genuine possibility.
What is particularly interesting in the current market is the resilience of Australian housing. Higher rates have reduced borrowing capacity and placed pressure on household budgets. But this has not translated into a broad housing downturn. Population growth, chronic housing undersupply, elevated construction costs and strong demand for well-located property continue to provide structural support.
From our perspective, as a mortgage manager operating across non-bank and private credit markets, we are seeing borrowers become more price-sensitive and serviceability-conscious, but demand for credit remains active. The market is adjusting rather than freezing."
Founder and managing director of Adelaide-based Significant Financial Solutions
"The most likely outcome at the upcoming RBA meeting is that the cash rate will remain unchanged. Although inflation is still above the RBA's target range, previous interest rate increases continue to slow household spending and economic growth. The RBA is therefore likely to hold rates steady while assessing the full impact of earlier tightening. This expectation also reflects current market conditions, where investors anticipate a pause, but recognise the RBA may raise rates again if inflation remains persistent."
