RBA interest rates live updates: Central bank hold rates at 4.35pc as homeowners now await Bullock’s next move

The RBA said the energy price shock since the start of the Middle East war at the end of February was adding directly to inflation.

There were increased costs for motorists at the bowser and high oil prices are being passed through to other goods and services, “so inflation is likely to remain high for some time”, the RBA said.

“This inflation impulse is in addition to the effect of capacity pressures in the economy.

“The board remains focused on ensuring that high inflation does not become embedded.”

The RBA also noted that consumer spending growth had slowed gradually “as expected”.

It also pointed out that momentum in the housing market had shifted, with housing prices falling in some capital cities and new housing loans declining noticeably - as already noted by Westpac, which saw applications tumble 20 per cent since the May Budget, and NAB, which recorded a 15 per cent drop in the last quater.

“Labour market conditions have eased by a little more than expected in recent months,” the RBA said.

“Labour market leading indicators point to only limited easing in the near term.”

But in expected fence-sitting style, it’s not giving much away in terms of when there might be a rate cut.

“There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation,” the bank said.

“Resolution of the Middle East conflict remains uncertain, and there are scenarios where inflation is higher and activity lower than forecast.

“A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia.”

The central bank’s monetary board said just moments ago that inflation had picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures.

“While the impact of the Middle East conflict on inflation has so far been less than expected, headline inflation is still too high,” it said.

“Trimmed mean inflation also remains elevated and is little changed from the March quarter.

“Oil and most related commodity prices remain higher than they were prior to the Middle East conflict.

“Short-term measures of inflation expectations have eased but remain higher than earlier in the year.”

The central bank will hold rates at 4.35pc but homeowners now await a hint from governor Michele Bullock’s on the next move.

Will she tell homeowners no further monetary tightening is needed, or will she keep theprospect of another hike alive?

We’ll find out more at the post-call presser in an hour.

We’re 15 minutes away from the August rate call.

VanEck’s head of investments and capital markets Russel Chesler say the market could be “seriously” underestimating the RBA appetite to increase rates.

The consensus is for a hold today at 4.35 per cent. But Mr Chesler said “while the market is not predicting another increase to the cash rate this year, we think that the market could very well be wrong”.

“On the data currently in front of us, there remains a strong case for the RBA to hike again,” he said.

“Although headline inflation fell in June, underlying inflation measured as the trimmed mean remained at 3.6 per cent well above the RBA’s target range of 2 to 3 per cent. We need the trimmed mean to fall and not remain at its current level.

“We have broad, domestically driven pressures, not temporary price movements the RBA can easily look through - housing remains the biggest pressure point, rising 6.8 per cent over the year to 30 June 2026, driven by electricity prices increasing 22.4 per cent, new dwelling costs rising 5.8 per cent and rents climbing 3.6 per cent.

“Households are also continuing to spend, up by 0.8 per cent in June, with discretionary spending up strongly, new car sales were up by 3 per cent.”

We’re just 45 minutes away from the RBA’s decision on official interest rates.

It’s a near-certainty that they stay on hold at 4.35 per cent.

More important will be Michele Bullock’s post-call commentary on where further monetary tightening will be needed.

Stay tuned and we’ll bring you all the details as they happen.

The ANZ bank is now forecasting that Sydney will suffer the sharpest fall in house prices since the early 1980s even if the Reserve Bank stops raising interest rates.

The big four bank has updated its forecasts to have a peak-to-trough fall of 14.5 per cent in Sydney, which would be more severe than the 13 per cent plunge from 2017 to 2019 following a banking regulator crackdown on interest-only loans.

Median house prices in Australia’s most expensive market peaked at $1.6 million in January and a more severe drop than the period before COVID would mark the most dramatic downturn since 1983 when the economy had been in the grip of a high-year recession.

Melbourne, another market where prices have been going backwards since February, was forecast to see a peak-to-trough decline of 12.8 per cent.

The strongest-performing markets since the pandemic were also tipped to suffer with ANZ forecasting a 7.9 per cent peak-to-trough decline in Brisbane and an equivalent 9.8 per cent plunge in Adelaide as Perth values fell 5.2 per cent from this year’s peak.

Capital city prices were forecast to fall by 4.3 per cent this year alone, following by 3.4 per cent drop next year when the Reserve Bank is expected to cut rates.

Sydney and Melbourne property values started falling in February when the Reserve Bank began the first of three rate hikes.

Prices in Brisbane, Adelaide and Perth fell in June, a month after Labor’s fifth Budget since coming to power restricted negative gearing for investment properties exchange after Budget night to brand new properties from July next year, as the 50 per cent capital gains tax discount was replaced with indexation and a minimum 30 per cent tax.

These are the banks currently offering rates below 6 per cent.

If yours isn’t on here, is it time to think about switching as competition for your mortgage among lenders heats up.

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Canstar said 49 lenders were offering at least one variable rate below 6 per cent, up from 38 at the start of June.

As a result, 60 per cent of lenders have at least one variable rate starting with a 5.

Rate tracking by Canstar shows 31 lenders have cut new customer variable rates since the beginning.

A complacent borrower paying 6.97 per cent on a $600,000 laon would be paying $4229 a month, which would cost them $79,315 over two years.

Refinancing the same loan to 5.99 per cent would cost the same homeowner $3862 a month, or $68,723.

That’s a saving of $10,592.

Might be worth pressing your lender.

A global pandemic, tariff wars and now a six-month Middle East incursion that shows few signs of being resolved anytime soon.

The end result?

Higher prices and runaway inflation that requires a solution.

The answer?

Well, it’s the only one the Reserve Bank has in its tool kit ... and that’s to squeeze household via higher interest rates and in turn higher repayments on the mortgage, diverting spare cash into the home loan that (hopefully) stops us spending.

That eases demand, prices fall, inflation cools and rates start to moderate.

That’s a basic generalisation of how it works in an ideal economic world. But the past few years have been anything but ...

Quod erat demonstrandum ...

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With so many factors outside the control of the average Aussie family, those with a mortgage can only sit back and hope for the best ... and plan accordingly.