Currency analysts at Goldman Sachs expect the RBA to hold rates at 4.35% through 2026, supporting the Australian Dollar outlook.
The RBA’s August decision left Australia with one of the more restrictive policy settings in the G10, but the message was patience rather than a declaration that tightening had ended.
The Australian Dollar had gained 6.08% against the US Dollar in 2026 and 8.72% over one year.
Goldman Sachs judges that the current 4.35% cash rate is already sufficiently restrictive to bring inflation lower, provided the economy follows the RBA’s forecast.
The central bank expects annualised trimmed-mean inflation of 3.4% in the third quarter and 3.2% in the fourth, around 0.3 percentage points above Goldman’s own projections.
That gap creates the bank’s case for an extended hold.
Softer inflation, labour-market and housing data should allow the RBA to wait through December, even though risks remain tilted towards another increase rather than an early cut.
Governor Michele Bullock kept that option open, saying the board was not ruling out “a need for further interest rate rises” if inflation moved away from the forecast path.
The hurdle for another rate rise
Three increases are still working through households and businesses, which makes incoming evidence more important than any single strong release.
“We’ve already raised three times and … it takes time for those to come through,” Bullock said in the press conference quoted by Goldman Sachs.
“We think we’ve got tight financial conditions, but we need a bit more evidence.”
Bullock described the balance of risks as “skewed to the upside on inflation” and added that “it’s quite possible we might need to go, but we will wait and see what the data tell us.”
The nuance matters for the Australian Dollar.
A prolonged hold preserves a relatively high yield without automatically promising further tightening, while an upside inflation surprise would revive the rate-rise premium quickly.
The Exchange Rates UK Research Currency Forecast Consensus Survey is constructive but gradual, with median AUD/USD projections of 0.70 for the third quarter, 0.71 for the fourth and 0.73 by the second quarter of 2027.
The current exchange rate is already above the near-term median, so Goldman’s hold call supports the currency’s carry appeal more clearly than it supports an immediate extension of the rally.
Our currency coverage draws on live market data, official economic releases and published bank research.
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