RBA Holds Cash Rate Steady – Eyes Now on November

The Reserve Bank of Australia (RBA) opted to hold the cash rate at 3.60 per cent at todays meeting, continuing its cautious approach after three cuts earlier this year.

The decision to pause follows a period of significant monetary easing already implemented by the RBA. The Board emphasised that the recent rate cuts need time to fully filter through to inflation, employment, and broader economic conditions before any further adjustment.

Though inflation pressures have continued to soften, growth has remained soft and the RBA is mindful of upside risks. Holding steady gives the RBA flexibility to respond should conditions shift.

By maintaining the status quo, the RBA is signalling that it is not ruling out further easing, but only if data supports it. Markets and economists continue to see November as the most likely window for a cut.

2025 has seen the RBA cut the cash rate three times, most recently in August, when it trimmed by 0.25 pp to 3.60 %.

Those cuts were intended to provide stimulus amid soft economic momentum and ease inflationary pressures, building more room for policy to manoeuvre if needed.

A Reuters poll of economists ahead of today’s meeting found unanimous expectations that the RBA would hold.

• Some markets had speculated that an aggressive disinflation surprise might prompt a cut, but the RBA’s caution was widely anticipated.
• Major banks generally interpret today’s decision as a temporary pause, not a pivot:
• Westpac and Commonwealth Bank continue to see November as the base case for another cut.
• NAB expects a slower, more gradual path.
• ANZ remains cautious, noting that future cuts will depend critically on inflation staying on track with targets.

These views echo a common refrain: todays hold underscores that the next move will be data-driven.

Risks and Uncertainties

• Inflation outcomes: While headline inflation has eased, upside surprises in Q3 inflation (e.g. from energy, services or wages) could complicate the RBA’s path.
• Growth momentum: The economy has shown signs of softness, and household spending remains under pressure.
• Global headwinds: Uncertainties from global financial conditions, supply chain disruptions, commodity prices, or geopolitical risks could tilt the case either way.

All eyes now shift to the next RBA review in November.

The minutes of today’s meeting will likely shed more light on internal deliberations, especially on how the Board views the balance of risks.

As always, the future will hinge on the trajectory of inflation, labour markets, and the broader global economic backdrop.

Although the cash rate stayed on hold this month, many lenders are still making changes to their interest rates to attract new clients.

If you haven’t reviewed your home loan in the past year, now could be a great time to explore potential savings.