It’s pretty much a done deal that the RBA will keep interest rates on hold Tuesday 30 September 2025, at 3.60%.
It’s also quite possible that interest rates will remain on hold until the early part of 2026.
The economy at an even tide
The economy is currently at an even tide—inflation is within the RBA’s 2% to 3% target band and the job market continues to surprise with unemployment remaining lowish at 4.2%
The RBA will need to see a threat to inflation moving higher above 3% or unemployment deteriorating, probably above 4.5%, for them to change interest rates.
The next and key quarterly inflation data release is out on 29 October 2025. The outcome of this number will likely have an important bearing on how the RBA sees interest rate settings for the rest of 2025. However we know that that it takes a lot for the current RBA board and Governor to move interest rates either up or down.
Is the economy slowing?
Anecdotally, the underlying economy feels like it’s weakening,
-Anyone involved in the building trade knows how tough it has been in the last 18 months.
-Recently I’ve heard of hundreds of electricians being made redundant from large electrical firms; maybe the big Covid shovel ready projects (many government sponsored) are coming to an end.
-A specialist doctor mentioned that in her medical community bookings were down. I thought doctor appointments would be the last thing someone delays or cancels!
The Spooky USA
As always the really spooky economic information is coming out of the USA. The USA needs 100,000 jobs growth every month just to break even. Preliminary estimates for August 2025 jobs growth was 22,000. In the last 4 months after revisions only 107,000 jobs were created. Are tariffs starting to really bite in the USA?
I think it’s once we return from summer holidays in late January 2026 and into the first quarter of 2026 that we’ll start to get a fuller picture of how the economy is travelling—not only in Australia but in the USA.
It may be at this point that the RBA needs to cut interest rates.
Let’s see.
No Cut Expected
It’s pretty much a done deal that the RBA will keep interest rates on hold Tuesday 30 September 2025, at 3.60%.
It’s also quite possible that interest rates will remain on hold until the early part of 2026.
The economy at an even tide
The economy is currently at an even tide—inflation is within the RBA’s 2% to 3% target band and the job market continues to surprise with unemployment remaining lowish at 4.2%
The RBA will need to see a threat to inflation moving higher above 3% or unemployment deteriorating, probably above 4.5%, for them to change interest rates.
The next and key quarterly inflation data release is out on 29 October 2025. The outcome of this number will likely have an important bearing on how the RBA sees interest rate settings for the rest of 2025. However we know that that it takes a lot for the current RBA board and Governor to move interest rates either up or down.
Is the economy slowing?
Anecdotally, the underlying economy feels like it’s weakening,
-Anyone involved in the building trade knows how tough it has been in the last 18 months.
-Recently I’ve heard of hundreds of electricians being made redundant from large electrical firms; maybe the big Covid shovel ready projects (many government sponsored) are coming to an end.
-A specialist doctor mentioned that in her medical community bookings were down. I thought doctor appointments would be the last thing someone delays or cancels!
The Spooky USA
As always the really spooky economic information is coming out of the USA. The USA needs 100,000 jobs growth every month just to break even. Preliminary estimates for August 2025 jobs growth was 22,000. In the last 4 months after revisions only 107,000 jobs were created. Are tariffs starting to really bite in the USA?
I think it’s once we return from summer holidays in late January 2026 and into the first quarter of 2026 that we’ll start to get a fuller picture of how the economy is travelling—not only in Australia but in the USA.
It may be at this point that the RBA needs to cut interest rates.
Let’s see.
by Boris Sfiligoi
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