Adam Creighton, chief economist at the Institute of Public Affairs, said the Reserve Bank of Australia may raise interest rates again in August [1].
This potential move comes as the central bank struggles to balance cooling house prices against inflation that remains elevated. A further hike would increase the financial pressure on Australian homeowners and businesses already dealing with previous increases this year.
Creighton said the Reserve Bank of Australia probably should increase interest rates one more time if they were solely concerned about the rate of inflation [1]. He said the August 2026 monetary policy decision is the likely timing for such a move [1].
According to Creighton, there is a 30 percent chance that the bank will implement a hike in August [1]. If this occurs, it would mark a total of four rate increases within the current year [1].
However, other reports suggest a different outlook for the Australian economy. Some analysts said the chance of another hike is slim, suggesting that fears of a U.S. recession could effectively end the possibility of further increases [2].
Despite these contradictions, Creighton said inflation targets remain the primary driver for the bank's decision-making process. He said the decline in housing costs may not be sufficient to deter the RBA from tightening monetary policy further to ensure price stability [1].
“There’s indeed a 30 per cent chance that they will in August”
The discrepancy between Creighton's forecast and other market reports highlights a tension in Australian economic forecasting. While falling house prices typically signal a cooling economy that would discourage rate hikes, persistent inflation creates a 'sticky' environment where the RBA may feel compelled to prioritize price stability over the immediate relief of borrowers.
