Archive

September 30, 2025
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RBA Holds at 3.6%: Inflation Concerns Temper Easing

  • The RBA holds at 3.6% as expected, but warns that Q3 inflation may exceed forecasts, with the underlying decline slowing.
  • Stronger Q2 GDP growth (1.8% annually) and a resilient labour market (4.2% unemployment) complicate the easing outlook amid a recovery.
  • A November rate cut remains possible but less likely, with banks split between November 2025 and May 2026 for the next move.
August 12, 2025
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RBA Cuts as Productivity Concerns Grow

  • The RBA cut rates by 25bp to 3.60%, as expected, in the third reduction of 2025, with unanimous board support following July's surprise 6-3 hold pending inflation data.
  • The central bank downgraded its productivity growth assumption to 0.7% from 1.0%, lowering medium-term GDP forecasts and signalling structural economic challenges ahead.
  • The Governor signals that a "couple more" cuts are likely, with the cash rate path expected around 3.0% by 2026, while maintaining a data-dependent approach to future policy decisions.
July 08, 2025
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Australia: Policy Rate Held At 3.85% (Consensus 3.6%) in Jul-25

  • The RBA surprised markets by maintaining the cash rate at 3.85%, rejecting consensus expectations for a cut and citing the need for further confirmation that inflation is sustainably on track to the 2.5% midpoint.
  • The decision reflects persistent uncertainty in the global economic environment and a domestic outlook characterised by robust labour market conditions but only gradual recovery in household demand, with risks on both sides of the inflation outlook.
  • The Board’s split vote and explicit data-dependent stance signal that future interest rate decisions will be highly sensitive to forthcoming inflation and labour market data, as well as evolving international developments.
May 20, 2025
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Australia: 25bp Rate Cut To 3.85% (Consensus 3.85%) in May-25

  • The RBA cut the cash rate by 25bps to 3.85%, in line with expectations, as trimmed mean inflation fell below 3% and is likely to remain near the midpoint of the 2–3% target range.
  • Despite easing financial conditions and recovering household incomes, consumption momentum remains weak, while high unit labour costs, driven by subdued productivity, present lingering inflation risks.
  • Global trade uncertainty and geopolitical tensions weigh heavily on the outlook, reinforcing the RBA’s cautious approach and commitment to respond decisively if downside risks to growth or inflation emerge.

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