After a first half of 2026 that brought three rate rises, the Reserve Bank has now held the cash rate at 4.35% twice in a row. It is tempting to read that pause as the all-clear, the moment the pressure comes off and cuts come into view.
That reading is premature, and acting on it could be expensive.
The RBA has been clear. Inflation is still too high, the board remains concerned about the outlook, and it has said plainly it could raise again if the risks to inflation build. Inflation eased to 3.5% in the year to July, which is progress, but it is still above the 2 to 3% target band, and underlying inflation has been stickier. A pause is not a pivot. It is the bank waiting to see whether the hikes it has already delivered are enough.
Where the next move actually points
The forecasts are split, and the split is the story. Some of the major banks now expect another hike before the end of 2026. Others expect the cash rate to hold into 2027, with cuts not arriving until well into next year at the earliest. Almost nobody is forecasting a near-term cut.
For planning purposes, that means the working assumption for a high earner should be rates at or near this level for a while, with the next surprise more likely up than down. Building a plan around cuts that the RBA itself is not promising is hoping, not planning.
What higher-for-longer does to a high-income position
The instinct is to treat rates as a mortgage story. For high earners it is broader, and it pulls in different directions.
On debt, the cost is real and, if anything, may rise further. Larger mortgages, investment property debt, and business facilities all carry more now than they did eighteen months ago, and investment and interest-only loans price above owner-occupier rates. Debt that felt cheap in 2021 is doing very different work today.
On cash and fixed income, the same environment is finally paying you. Term deposits and high-interest accounts yield more than they have in years, which changes the calculation on how much cash to hold and where. Low-risk money is no longer automatically lazy money.
On portfolios, higher rates reset the maths on everything. They lift the bar that growth assets must clear, they pressure rate-sensitive sectors, and they widen the gap between a considered allocation and a lucky one.
What to consider now
Stress-test your debt at a higher rate, not today’s rate. If the RBA has left the door open to another rise, model your repayments above where they sit now and check the answer is comfortable rather than merely survivable. This applies to home, investment, and business borrowing.
Revisit fixed versus variable with clear eyes. Near what many economists see as the top of the cycle, that decision is live again. There is no universal answer. A split suits some, full variable suits others, and the right call depends on your cash flow, timeframe, and how much certainty is worth to you.
Put idle cash to work. Cash earning a competitive rate is doing a real job now. Cash sitting in a transaction account earning nothing is a quiet cost.
Do not act on the next headline. Whatever happens on 29 September, one decision does not change a sound long-term plan. The risk is reshuffling a portfolio in reaction to a single move.
The Obsidian perspective
A rate cycle is a clean test of how a person behaves when the environment turns against the plan they were comfortable with.
The temptation is to treat every RBA meeting as a reason to do something. Refinance in a hurry, pull money from markets, restructure debt on a forecast. Most of that is motion, not progress. It feels like control and rarely is.
The people who come through cycles like this in good shape are not the ones who predicted the moves. Nobody reliably predicts the RBA, including the RBA. They are the ones whose plan already assumed conditions would change, because conditions always do. Their debt was built to survive a higher rate before the higher rate arrived. Their cash had a job. Their assumptions were honest.
That work happens before the cycle turns, not during it. Rates are not a thing to predict. They are a condition to prepare for, and the preparation is almost the entire difference between compounding steadily and lurching from one headline to the next.
Sources & Further Reading
- Reserve Bank of Australia: Monetary Policy Decision, August 2026; next decision 29 September 2026
- Australian Bureau of Statistics: Consumer Price Index, July 2026 (3.5%)
- Major bank economic commentary on the 2026 rate outlook
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IMPORTANT DISCLAIMER
This article contains general advice only and does not consider your personal objectives, financial situation, or needs. Interest rate, inflation, and monetary policy figures are current as at September 2026 and subject to change, including at the RBA meeting on 29 September 2026. Economic forecasts are estimates and may prove inaccurate. The effect of rate movements on your circumstances depends on your debt, loan structures, cash position, and portfolio. Before acting on any rate change, seek personal advice from a licensed financial adviser and, where relevant, a licensed credit provider or mortgage broker. Obsidian Wealth Management Pty Ltd is a corporate authorised representative of Australian Mortgage and Financial Advisers Pty Ltd, Australian Financial Services Licence 389206.
