July inflation data raises the risk of another RBA rate hike in September

Just weeks after the Reserve Bank held the cash rate steady at its August meeting, new inflation figures released this week have economists talking about another hike as soon as September. The monthly trimmed mean, the RBA's preferred measure of underlying inflation, rose to 0.5% in July, keeping the annual underlying rate at 3.6%, well above the RBA's target band. For first home buyers watching their borrowing power and planning around a rate that already sits at 4.35%, this is worth understanding before you lock in a rate or sign a contract.

What the new inflation data actually shows

Headline inflation eased slightly in July on an annual basis, which on its own would usually support the case for rates staying on hold or even coming down. But the RBA looks past headline numbers to the trimmed mean, a measure that strips out the most volatile price moves to get a clearer read on underlying pressure. That measure ticked up rather than down, and it is the number the RBA has said it weighs most heavily when setting the cash rate.

Ahead of this release, most economists surveyed had expected the RBA to hold rates again at its next meeting in late September. The higher-than-expected trimmed mean figure has shifted that view for some forecasters, who now see a real chance of a further increase if the trend continues into next month's data.

Why the RBA might move again after just holding

The Reserve Bank has already lifted the cash rate three times since the start of 2026, and Deputy Governor Andrew Hauser has publicly reiterated that the Bank stands ready to raise rates further if upside risks to inflation keep showing up in the data. That is a reminder that an August hold is not the same as a signal the hiking cycle is over. The RBA has repeatedly said its decisions are made meeting by meeting, based on the numbers in front of it at the time.

• Underlying inflation is the RBA's main gauge: a rise in the trimmed mean matters more to the Bank than a fall in the headline rate.
• The cycle may not be finished: three hikes this year have not yet fully brought underlying inflation back within target, based on this data.
• September is the next test: another strong monthly inflation print before then could tip the balance toward a fourth increase this year.

What this means for first home buyers

Nobody, including the RBA itself, can say with certainty whether the cash rate will move again in September. But for a buyer weighing up borrowing capacity, loan structure, or when to make an offer, it is a reasonable moment to plan for the possibility rather than assume the current rate is the ceiling.

• If you are close to formal pre-approval, ask your lender or broker how your borrowing capacity would change under a further rate rise, since lenders already apply a buffer above the current rate when assessing serviceability.
• If you are comparing fixed and variable loan options, this is a reasonable time to talk through the trade-offs with your lender or a broker, who can walk you through how each option might perform under a further increase.
• Build a small buffer into your monthly budget now, rather than assuming repayments stay exactly where they are, so a further increase does not come as a shock after settlement.
• Keep an eye on the September RBA decision and the inflation data leading up to it, since both will shape the interest rate you may end up paying on your first home loan.

Run the numbers

Use these tools to see how a further rate rise could affect your own situation before you commit to a loan:

• Interest Rate Shock Tester - model what your repayments could look like if the cash rate rises again.
• Borrowing Power Calculator - see how your estimated borrowing capacity shifts as rates change.
• Mortgage Offset Calculator - compare how an offset account could help absorb future rate movements over the life of your loan.