RBA will hold rates 1 November 2025 Melbourne Cup Day.
Yesterday’s quarterly inflation result pretty much confirmed that RBA’s official interest rates will remain on hold at 3.60% into at least early 2026.
Trimmed mean inflation (the RBA’s preferred measure) hit 3 per cent, at the top of their 2-3 per cent target band.
Much of the rise in inflation was from higher electricity prices, so I would expect to see a new round of government subsidies in the not too distant future.
RBA walks a tight rope
The RBA’s job is to walk a tight rope and find a balance between inflation taking off and employment and the economy tanking. However the reality for now is that the RBA is more concerned with inflation than it is with unemployment.
The reason for this is that there is more pain for the RBA in raising interest rates (from all sectors) to fight inflation than there is in cutting interest rates to save employment. The RBA also has the luxury of an unemployment rate that is still relatively low by historical standards.
The only way the RBA will consider cutting interest rates going forward is if trimmed mean inflation is comfortably cemented between 2-3% and/or if unemployment has sustainably pushed up towards 5% demonstrating a real weakness in the economy.
Next quarterly inflation number is an important influencing factor
The next quarterly inflation number is out 28 January 2026 and the RBA is unlikely to do anything with interest rates until this number is known, especially given yesterday’s hotter-than-expected quarterly inflation result.
It’s clear from the RBA governor’s recent comments that she has concern with how inflation will play out both from a local perspective and globally given the upheaval occurring due to tariffs, world trade and AI.
On a very positive note ratings agency Fitch has reaffirmed Australia’s AAA credit rating (one of 9 other countries) and maintained it’s perfect score consistent with all three major rating agencies.
It looks like the RBA will be on hold over the summer until at least the first RBA meeting of 2026 in February.
Let’s see!
Bets are off!
RBA will hold rates 1 November 2025 Melbourne Cup Day.
Yesterday’s quarterly inflation result pretty much confirmed that RBA’s official interest rates will remain on hold at 3.60% into at least early 2026.
Trimmed mean inflation (the RBA’s preferred measure) hit 3 per cent, at the top of their 2-3 per cent target band.
Much of the rise in inflation was from higher electricity prices, so I would expect to see a new round of government subsidies in the not too distant future.
RBA walks a tight rope
The RBA’s job is to walk a tight rope and find a balance between inflation taking off and employment and the economy tanking. However the reality for now is that the RBA is more concerned with inflation than it is with unemployment.
The reason for this is that there is more pain for the RBA in raising interest rates (from all sectors) to fight inflation than there is in cutting interest rates to save employment. The RBA also has the luxury of an unemployment rate that is still relatively low by historical standards.
The only way the RBA will consider cutting interest rates going forward is if trimmed mean inflation is comfortably cemented between 2-3% and/or if unemployment has sustainably pushed up towards 5% demonstrating a real weakness in the economy.
Next quarterly inflation number is an important influencing factor
The next quarterly inflation number is out 28 January 2026 and the RBA is unlikely to do anything with interest rates until this number is known, especially given yesterday’s hotter-than-expected quarterly inflation result.
It’s clear from the RBA governor’s recent comments that she has concern with how inflation will play out both from a local perspective and globally given the upheaval occurring due to tariffs, world trade and AI.
On a very positive note ratings agency Fitch has reaffirmed Australia’s AAA credit rating (one of 9 other countries) and maintained it’s perfect score consistent with all three major rating agencies.
It looks like the RBA will be on hold over the summer until at least the first RBA meeting of 2026 in February.
Let’s see!
by Boris Sfiligoi
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