The Reserve Bank of Australia (RBA) is set to announce its latest monetary policy decision imminently, with markets widely anticipating no change to the benchmark cash rate.

The softer Australian inflation data released at the end of July effectively cemented expectations for a hold, removing any remaining case for a near-term adjustment. Traders are currently pricing in approximately 97% odds that the RBA will leave the cash rate unchanged at today's meeting, with the rate expected to remain steady at 4.35%. The cash rate has been at this level since November 2023, when the RBA delivered its most recent hike in a tightening cycle that began in May 2022. Australia's position stands in contrast to several peer central banks—the Federal Reserve, European Central Bank, and Bank of England have each either begun cutting rates or moved closer to doing so, while the RBA has maintained a tightening bias amid concerns that inflation remains above its 2–3% target band.

Beyond the headline decision, market attention will focus squarely on the accompanying policy statement. Key questions include whether the RBA retains any hawkish language or whether there are signs of internal dissent among board members. The threshold for hawkish surprises is considered relatively low, meaning even subtle shifts in tone could move markets.

Looking further ahead, traders are pricing approximately 82% odds of no change at the September meeting as well. The November and December meetings are viewed as closer to a coin flip, with only about 14 basis points of additional rate hikes currently priced in by year-end. Any hawkish signal from the RBA would need to be corroborated by subsequent economic data to sustain market conviction.

Much of the existing forward guidance is expected to remain intact. In its previous policy statement, the RBA stated:

"Following the three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and there are signs that the economy is slowing as expected. But inflation is still too high and the Board judged that it was appropriate to leave the cash rate target unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption.

The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand and the outlook for inflation and the labour market. Monetary policy is well placed to respond to developments and the Board is focused on its mandate to deliver price stability and full employment. It will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required."

Any modifications to this language will be heavily scrutinized, along with any indication of whether today's decision was unanimous or divided.

Several analyst previews were published ahead of the decision:

• RBA preview: Analysts see cash rate on hold at 4.35% Tuesday
• RBA preview - Westpac says soft Q2 CPI gives RBA room to hold at 4.35%
• Preview: RBA meet Tuesday. CBA expects RBA to hold rates through the rest of 2026
• MUFG opens long AUDJPY at 111.20, targets 114.50 as yen intervention debate builds
• Preview: RBA to stay in pause and observe mode, TD Securities says ahead of today's decision