RBA hikes to 4.35% (third hike) — official statement confirms; one dissenter voted to hold; May CPI headline eases but underlying inflation rises; rate relief hopes dim; housing market cooling accelerates with 0.7% national price drop in July

RBA hiked cash rate to 4.35% in July 2026 (third hike), with one dissenter voting to hold. Official statement cites Middle East conflict driving fuel inflation and capacity pressures. May CPI headline eased to 4.0% but underlying inflation rose to 3.6% (trimmed mean), driven by services inflation. Market sees 15% chance of another hike, but traders pricing in a fourth rate rise after strong jobs surge. Household spending fell 1.1% in April. GDP growth slowed to 0.3%, per capita GDP falling. Two-speed economy: AI/data centre investment booming while households tighten belts. New Middle East tensions push oil over US$100, adding fresh inflation fears. New data: national home prices fell 0.7% in July (biggest drop since Dec 2022), Sydney/Melbourne leading, spreading to Perth. RBA flagged this, fueling speculation hikes are done.