The Reserve Bank of Australia left its cash rate unchanged at 4.35% at its August 2026 meeting in a unanimous decision that matched market expectations. The Board said financial conditions have already tightened after three rate increases earlier this year, but inflation remains too high. It pointed to capacity pressures behind the pickup in the second half of 2025, while higher oil and related commodity prices linked to the Middle East conflict have added fresh pressure. Higher fuel costs are also feeding through to other goods and services, and short-term inflation expectations, although easing, remain elevated. At the same time, consumer spending growth is slowing, housing momentum has weakened and labour market conditions have eased more than expected. The Board expects inflation to stay high and return to around the midpoint of the target range in late 2027, with upside risks, and said it is holding rates while assessing incoming data but may raise the cash rate if inflation risks materialise.