Frustrated mortgage holders are unlikely to get any cash rate relief even as Australia makes progress on inflation.Ahead of Wednesday’s official inflation figures being released, experts forecast headline inflation will drop from 3.8 to around 3.2 per cent.But this is largely just timing, with a particularly egregious July 2025 rolling out of the calculation, giving the illusion of progress made on the fight against inflation. The all-important trimmed mean inflation rate – which the Reserve Bank uses as it cuts out the top and bottom 15 per cent of costs – is expected to improve marginally from 3.6 to 3.5 per cent. AMP chief economist Shane Oliver said Australia will make progress on headline inflation but it is not the win households would be hoping for.“We need a significant lower number on a monthly basis given that July last year was so bad,” he told NewsWire.“It will look better on paper, with the headline inflation rate coming down a little bit, but it certainly won’t be good enough to dampen concerns of a hike.”Mr Oliver said the July figure is a little “academic”, as it is unlikely to sway the Reserve Bank in either direction ahead of their September meeting.In its August meeting the RBA ultimately held the cash rate at 4.35 per cent despite stating inflation is too high. So far the RBA has lifted the cash rate at three of its five meetings in 2026 by a total of 75 basis points in its fight against inflation.The cash rate has climbed from 3.60 to 4.35 per cent.The RBA says these interest rate hikes will slowly bring inflation back towards target.Australia’s trimmed mean inflation rate – which strips out the top and bottom 15 per cent – came in at 3.60 per cent for the 12 months to June. Headline inflation was 3.8 per cent.Both of these are above the RBA’s 2 to 3 per cent target range.Risk to credibility The Reserve Bank risks losing some credibility if it does not proceed with rate hikes to get rid of Australia’s inflation problem. Creditability of the central bank is based on Australians believing the central bank can achieve its 2 to 3 per cent inflation target. “You get this cynicism from workers who say ‘I am sick of going backwards so I want a wage rise’ and the problem with that is we don’t have the productivity to support that, “Mr Oliver said. “The other concern is if businesses think inflation is temporary they are less inclined to pass on cost increases, but if they lose confidence, then they are more likely to pass on cost increases.”The Reserve Bank themselves in their recent minutes of monetary policy acknowledged the problem of persistently high inflation and expectations from the community.“Members also noted staff research that indicates short-term inflation expectations matter for inflation dynamics even when longer term expectations are anchored,” the board said.“They observed that both findings imply that a more pre-emptive approach to monetary policy might be appropriate when the economy is subject to capacity constraints and adverse supply shocks.”Mr Oliver said this is why the Reserve Bank may have to go harder on interest rates to get back within the target if they wait too long. “That is the main argument towards ripping the bandaid off and hiking two weeks ago. That argument still remains valid for the September meeting unless we get a downside surprise.“There is an argument the RBA is losing credibility.”Mr Oliver did concede he feels for both the Reserve Bank and households who would have to endure higher interest rates, but ultimately says there could be a need for further rate hike pain.“Unfortunately, I would be tempted to hike.”“I am well aware of the pain it is causing households with a mortgage, but I am also well aware of the damage continuous high inflation causes.”“The main reason we are seeing anger in Australia is everyone is experiencing price rises but not everyone pays the price via their mortgage.“If we don’t get it under control that harms everyone and longer term it could even mean higher mortgage rates as we have to go further to get inflation down.”Read related topics:Reserve Bank