The Reserve Bank of Australia (RBA) has kept the nation’s interest rates unchanged on Melbourne Cup Day, maintaining the cash rate target at 3.6 per cent amid persistent inflationary pressures.
Announcing its decision half an hour before the famous race, the RBA board said it was prudent to hold rates steady following recent data showing inflation had accelerated.
According to the Australian Bureau of Statistics (ABS), the consumer price index rose by 1.3 per cent in the September quarter — the largest quarterly increase since March 2023 — while the trimmed mean, the RBA’s preferred inflation measure, increased by 1 per cent.
In its monetary statement, the RBA said it believes the recent spike in inflation is temporary. “The Board’s judgement is that some of the increase in underlying inflation in the September quarter was due to temporary factors,” the statement read.
The bank’s latest forecast projects inflation rising above 3 per cent in the coming quarters before easing to 2.6 per cent by 2027, assuming one more rate cut in 2026.
The board described its decision as “cautious,” citing the need to assess the full impact of previous rate reductions. “Financial conditions have eased since the beginning of the year, but it will take some time to see the full effects,” it said.
With only one policy meeting left in 2025, most analysts now believe borrowers are unlikely to see any rate changes until next year.
Peter White, Managing Director of the Finance Brokers Association of Australia, said rising inflation and modest unemployment increases suggest no immediate relief for borrowers. “It won’t be until the new year before we see any potential for a rate reduction,” he noted.
Graham Cooke, Head of Consumer Research at Finder, said the decision offered little comfort to struggling households. “Many Australians were hoping for some breathing room before Christmas, but inflation has returned. Unless something drastic happens, the next rate adjustment could be in 2026,” he said.
Economist Saul Eslake of Corinna Economic Advisory agreed that hopes for a rate cut this year are over, adding, “The higher-than-expected September quarter CPI has dealt a fatal blow to November’s rate-cut hopes and reduced, though not entirely, the chances of one in February next year.”
