The RBA Cash Rate in 2026: What It Means for Your Mortgage and Savings

The RBA's cash rate target was set at 4.35% at the bank's May 2026 meeting and has been held at that level through the June and August 2026 meetings. This followed a period of increases earlier in the year — in February 2026, the RBA lifted the cash rate by 0.25 percentage points to 3.85%, citing renewed inflationary pressure from a private sector demand recovery that was running faster than expected. The rate rose further to reach 4.35% by May.

The next scheduled decision is 29 September 2026.

The RBA's own commentary around its February 2026 increase pointed to inflation running hotter than forecast, driven by stronger-than-expected private sector demand. Annual headline inflation, measured by the Consumer Price Index, was 3.5% in the July 2026 month. Annual trimmed mean inflation — a measure that strips out volatile price movements — was still forecast to be above the RBA's target band, at around 3.2%, by the end of 2026.

This context matters because the RBA sets the cash rate with reference to its inflation target, not in response to cost-of-living pressure on households directly. A cash rate increase is a tool to slow inflation, even though it also increases mortgage repayments for variable-rate borrowers in the near term.

Heading into the RBA's 29 September 2026 decision, the major banks are split:

The disagreement between the banks reflects genuine uncertainty about whether inflation is easing fast enough for the RBA to hold, or whether the demand-driven pressures that triggered the February 2026 hike are still strong enough to justify another increase.

If your mortgage rate moves with the cash rate, a further 0.25 percentage point increase — the size being forecast by NAB, ANZ and CBA — would add to your monthly repayment. The exact dollar impact depends on your outstanding loan balance and remaining term, but the direction is consistent across forecasts: none of the major banks are currently forecasting a rate cut before the end of 2026. Westpac's position — a hold rather than a cut — is the most accommodating scenario among the four major banks' current forecasts.

Given that no major bank forecast currently includes a rate reduction in 2026, borrowers considering a fixed-rate loan to lock in certainty are weighing that decision against a rate environment that is, at worst, expected to rise slightly further, and at best, expected to stay flat.

Higher cash rates generally flow through to higher rates on savings accounts and term deposits, though not always by the same amount or on the same timeline as mortgage rate changes. If the cash rate does rise to 4.60% as three of the four major banks are forecasting, term deposit rates have room to move upward as well, though banks set these independently and don't always pass through the full RBA movement.

The RBA's cash rate is not the interest rate you pay on your mortgage — it's the rate banks use to lend to each other overnight, and it strongly influences, but doesn't directly set, retail mortgage rates. When the RBA changes the cash rate, banks typically adjust their standard variable rates, but the size and timing of that pass-through is a commercial decision made by each lender, not an automatic, same-day change. If you're on a variable rate, check your specific lender's announcements around each RBA decision date rather than assuming the full RBA movement is automatically applied to your loan on the same day.

1. Check whether your mortgage rate is variable or fixed, and if fixed, note when your fixed term expires relative to the current rate environment.
2. If you're on a variable rate, watch for your lender's own rate announcement following each RBA decision (the next is 29 September 2026) rather than assuming the cash rate change applies automatically to your loan.
3. If you're comparing a new fixed-rate offer against staying variable, weigh it against the fact that none of the major banks' current forecasts include a rate cut before the end of 2026 — the realistic range under current forecasts is a hold at 4.35% or a rise toward 4.60%.
4. If you hold savings in term deposits, compare current rates against any potential increase if the cash rate does move — but don't assume savings rates rise by the same margin as the cash rate itself.

Is the RBA cash rate the same as my mortgage interest rate? No. The cash rate influences retail mortgage rates but each lender sets its own rate and decides independently how much of a cash rate change to pass on, and when.

When is the next RBA rate decision? 29 September 2026, based on the RBA's published schedule as of August 2026.

Do all banks agree on what will happen next? No. As of August 2026, NAB, ANZ and Commonwealth Bank are each forecasting a rate hike (though at different months), while Westpac is forecasting the RBA will hold the rate steady through the rest of 2026.