One phrase has anchored the Reserve Bank of Australia's messaging through the second half of 2026: Inflation is "still too high". The Central Bank used it in its 11 August statement, and senior officials have echoed it since. For borrowers and savers, the natural follow-up question is whether that language points to another rate rise. The honest answer is that a further increase is possible but not certain, and it depends on the data. This explainer unpacks what "too high" means in numbers, why the RBA has limited patience for above-target inflation, and what would tip the Monetary Policy Board toward acting when it meets on 28 and 29 September 2026.

What the RBA Said

When the Board left the cash rate target unchanged at 4.35 per cent on 11 August, it did not signal comfort. It described inflation as still too high and said it was focused on ensuring high inflation does not become embedded in the economy.

The statement went further, saying the Board would raise the cash rate further if upside risks to inflation materialise. In other words, the pause was conditional, not a declaration that the tightening cycle had ended.

Assistant Governor (Economic) Sarah Hunter reinforced the point at the Australian Financial Review Property Summit on 8 September 2026, saying "inflation is top priority right now". She noted the August Statement on Monetary Policy judged the risk to inflation as "skewed to the upside", and said the Board does not "really have tolerance for inflation to continue to be above target for an extended period". If inflation looked stronger than forecast, she said, "the Board may well have to raise interest rates to tackle that".

The Key Numbers

Headline CPI: 3.5%; trimmed mean: 3.6% — above the 2.5% midpoint target. Cash rate: 4.35% after three 2026 hikes. Inflation not expected at target midpoint until early 2028.

What Could Happen Next

So, could rates rise again? On the RBA's own logic, the trigger is clear: if upside risks to inflation materialise, or if inflation looks stronger than forecast, the Board may act. Markets are pricing roughly a two-in-three chance of a rise at the 28 to 29 September meeting, which reflects expectations rather than a guaranteed outcome.

The countervailing forces are real. The August statement pointed to slowing consumer spending, a softening housing market with new loans declining, and Unemployment edging up to 4.5 per cent in July. Those signs of a cooling economy could argue for patience.

The RBA's central expectation, set out in August, was that inflation would not return to the middle of the target band until around early 2028, with Deputy Governor Andrew Hauser saying it was due to be back in target by the end of 2027. That timeline suggests the Board expects a gradual descent rather than a rapid one, which keeps the option of further tightening on the table without committing to it.

Conclusion

The RBA's "still too high" refrain is best read as a warning that the Job is not finished, not as a promise of imminent action. Inflation sits at 3.5 per cent headline and 3.6 per cent underlying, above the 2 to 3 per cent target, and the Board has said it will raise rates further if risks build. Whether that happens at the September meeting depends on the incoming data on prices, wages and global costs. For now, another rate rise is a genuine possibility that markets rate at roughly two-in-three, but the outcome remains data-dependent and undecided.