MNI RBA Review-August 2026: Rate Risks Skewed To Upside

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EXECUTIVE SUMMARY: 

• The Board voted unanimously to leave rates at 4.35% while it “assesses how the economy is evolving” but “inflation is still too high”.
• Both a policy pause and a rate hike were discussed with Governor Bullock warning that if inflation doesn't print in line with the bank's expectations then it will act. She was very clear that risks to rates were skewed to the upside inline with inflation risks.
• Trimmed mean CPI was revised down 0.2pp to 3.3% in Q4 2026 but was unchanged at 2.6% in Q4 2027 and then revised down 0.1pp to 2.4% in Q2 2028 but there are “upside risks” to this projection. 
• RBA-dated OIS pricing is slightly firmer than yesterday’s pre-RBA Decision levels. Pricing continues to point to modest tightening across all meetings, with the probability of a 25bp hike rising from 22% at September’s meeting to 71% by December 2026.