The Reserve Bank of Australia (RBA) announced on November 5 that it will keep the cash rate target unchanged at 4.35%, marking the eighth consecutive month without a rate change and maintaining rates at a 13-year high.

The statement noted that while inflation has been gradually receding from its 2022 peak, with the annual inflation rate for the September quarter falling within the RBA’s target range of 2–3%, the central bank remains vigilant about potential upward risks to inflation. According to the RBA’s latest forecast, inflation is expected to return to the target range by the end of 2025 and align closer to the midpoint by 2026.

The restrictive monetary policy has led to a decline in economic activity over the past year; however, the labor market remains resilient, with unemployment still near a historic low of 4.1%. The RBA expects consumer spending to pick up in the latter half of the year, though slower-than-expected growth in this area could further dampen economic expansion and potentially strain the labor market.

Additionally, the RBA highlighted uncertainties in the global outlook, particularly with respect to geopolitical risks. If the protectionist Trump camp were to win the upcoming U.S. presidential election, it may impose high tariffs on China’s imports. Given that China is Australia’s largest trading partner, this could have a significant knock-on effect on Australia’s economic growth prospects.

While most Western economies have already entered a rate-cutting cycle to support or reinvigorate economic growth, the RBA has shown a strong commitment to waiting until inflation visibly recedes. This resolve has prompted the market to push back expectations for the RBA’s first rate cut from February to May.

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• Statement by the Reserve Bank Board: Monetary Policy Decision

The Reserve Bank of Australia (RBA) announced on September 24 that the cash rate target remain at 4.35%, marking the seventh consecutive month at this level, which is also the highest in nearly 12 years.

In the meeting statement, the RBA noted that restrictive financial conditions continue to suppress consumption, contributing to a slowdown in the economy. However, the unemployment rate remains stable, the labor force participation rate is at a historic high, and job vacancies continue to grow, slightly easing labor market tensions.

The RBA stated that while household consumption is expected to recover in the second half of the year, if the pace is slower than anticipated, it could lead to prolonged weakness in economic output and further softening of the labor market. Moreover, global economic instability and geopolitical risks add to the uncertainty surrounding Australia’s economic outlook.

The RBA also highlighted that recent data reinforces the potential for upside inflation risks. The central bank now expects inflation to return to the target range by the end of 2025 (compared to the previous estimate of mid-2025 in August) and to approach the midpoint of the target range by 2026.

The RBA emphasized that bringing inflation down remains its top priority and stated that it would maintain restrictive monetary policy until there is clear evidence that inflation is steadily returning to the target range. Following this statement, the market now expects the RBA to hold off on cutting rates until February next year.

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