The Reserve Bank of Australia (RBA) stayed true to expectations this Melbourne Cup Day by maintaining the country’s interest rates in response to climbing inflation.
Announcing their decision just 30 minutes before the iconic horse race—a timing that has become a traditional coincidence—the RBA board opted to hold the cash rate steady at 3.6 percent.
Recent figures from the Australian Bureau of Statistics (ABS) revealed a 1.3 percent rise in the consumer price index for the September quarter, marking the highest quarterly increase since March 2023. Meanwhile, the trimmed mean, which the RBA favors for assessing core inflation, grew by 1 percent.
In its statement on monetary policy, the RBA board expressed the view that the inflation spike is a short-lived phenomenon.
“The board judges that some of the increase in underlying inflation during the September quarter can be attributed to temporary factors,” it stated.
According to the November Statement on Monetary Policy, which assumes a single rate cut in 2026, the central forecast anticipates underlying inflation will rise above 3 percent in the near term before stabilizing at 2.6 percent by 2027.
“The central forecast in the November Statement on Monetary Policy, which is based on a technical assumption of one more rate cut in 2026, has underlying inflation rising above 3 per cent in coming quarters before settling at 2.6 per cent in 2027.”
The decision, which was unanimous, was reflective of the board’s “cautious” approach.
“Financial conditions have eased since the beginning of the year, but it will take some time to see the full effects of earlier cash rate reductions,” they said.
“Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve.
“The Board remains alert to the heightened level of uncertainty about the outlook in both directions.”
With just one meeting left in the 2025 calendar year, many experts now believe that struggling borrowers won’t see any movement on interest rates until at least next year.
“We’ve seen rising inflation and this has been accompanied by a rise in unemployment â but perhaps not a big enough rise to make a dent in inflation,” Peter White, managing director of the Finance Brokers Association of Australia, said.
“This is why we expect it won’t be until the new year before we see any potential for a rate reduction.”
Graham Cooke, head of consumer research at Finder, said the RBA’s decision offers little comfort to households already feeling the pinch.
“Many Australians were hoping for some breathing room before Christmas, but inflation has returned, and the board is waiting for clearer signs of progress before moving on rates.
“Unless something unprecedented happens, we’re now looking at 2026 for the next rate adjustment.
“If inflation eases, we could see a cut early next year. Until then, homeowners will need to look to other lenders for a better deal.”
The outlook was backed by Saul Eslake, from Corinna Economic Advisory, who said mortgage holders would probably have to wait until February for any respite.
“The ‘materially’ higher-than-expected September quarter CPI has dealt a fatal blow to hopes of a rate cut in November, and reduced – although in my honest opinion not fatally – the chances of a rate cut in February next year,” Eslake said.
One of the few dissenting voices was Micaela Fuchila, of Jarden, who said economic conditions still gave the RBA room to make a reduction.
“At this point in the cycle focus is expected to shift to the labour market. Employment growth has slowed and the unemployment rate is on the rise while inflation pressures remain contained,” she said.
Analysis by Finder’s Consumer Sentiment Tracker showed more than one-in-three homeowners said they struggled to pay their mortgage in October.
Cooke said it pays to shop around and consider switching mortgage lenders.
”A number of lenders are also offering cashback â up to $4000 â for refinancing, which could be worthwhile for some borrowers looking for a cash injection,” he said.
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