The central bank continues to keep a tight rein on the cash rate.
The Reserve Bank of Australia (RBA) has ridden a steady course for its Melbourne Cup Day rate decision, holding the official cash rate steady at 3.60 per cent for November.
In a statement, the Monetary Policy Board said the decision was unanimous, with governor Michelle Bullock revealing on Tuesday that the board did not consider a rate cut this month.
The RBA also revised its cash rate forecast, now expecting CPI inflation to be above 3 per cent for much of the next year before declining to around the middle of its 2-3 per cent target range by late 2027. Underlying inflation will keep climbing to hit 3.2 per cent for the December 2025 quarter, before easing in the second half of 2026.
"The recent data on inflation suggest that some inflationary pressure may remain in the economy," the board said, but noted that it believed the increase in underlying inflation in the September quarter was due to "temporary factors".
"With private demand recovering and labour market conditions still appearing a little tight, the board decided that it was appropriate to maintain the cash rate at its current level at this meeting.
"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.
"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."
It continued: "The board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome."
Punters were widely tipping the central bank to leave rates unchanged at the same level since they were last cut 0.25 per cent back in August.
The rate hold comes less than a week after underlying inflation accelerated to 3.0 per cent for the September quarter, to reach the top of the RBA’s 2–3 per cent target band.
However, the RBA has said that 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.
All four of the major banks had predicted that the central bank would maintain its current settings, while the ASX 30 Day Interbank Cash Rate Futures was trading at 96.42, indicating a 7 per cent expectation of an interest rate decrease to 3.35 per cent.
Rate cut wait goes on
Reflecting on the RBA's decision to hold rates, the Mortgage and Finance Association of Australia (MFAA) CEO Anja Pannek said the latest inflation figures, employment data and the unpredictability of global markets showed the economic situation "remained volatile and could change quickly".
“While mortgage holders will be disappointed, we encourage those who want a better rate on their loan or are considering refinancing to contact their broker. They have the expertise and skills to look at their overall financial situation and find a solution that best meets their needs.”
Similarly, Peter White AM, the managing director of the Finance Brokers Association of Australia (FBAA), said he expected rates to stay on hold.
“We've seen rising inflation and this has been accompanied by a rise in unemployment – but perhaps not a big enough rise to make a dent in inflation. This is why we expect it won’t be until the new year before we see any potential for a rate reduction.
"There is a lot of talk at the moment about whether borrowers should choose fixed or variable rates. I’d expect that brokers would be receiving similar enquires.
"Brokers understand that there’s no right or wrong answer as each person’s circumstances are different. The advantage we have is the ability and of course the obligation to act in the best interests of each customer."
He added: "I’d remind brokers to encourage their customers who are seeking a rate reduction to talk to their existing lender first as this will avoid the costs of refinancing."
"But of course the opportunity is there for brokers to assist in refinancing if the lender doesn’t budge.”
Mortgage Choice CEO Anthony Waldron said the rate hold came as no surprise given the annual inflation print.
“The RBA has been determined to get the inflation target rate to sit sustainably within its range of 2-3 per cent, so the significant jump in the quarterly CPI made a cup day cut unlikely,” he added.
“My message to anyone looking to buy is simple: don’t wait for the RBA. A rate cut may not come until the RBA is satisfied that CPI is firmly within its target range, but that doesn’t mean a better home loan option isn’t available to you.
“With the new year around the corner, now is the perfect time to assess your financial situation and goals and meet with a broker to find out if you can get a better deal on your home loan.”
Mark Haron, executive director at aggregator Connective, said the RBA’s decision to hold the cash rate reflects a cautious approach driven by the slower-than-expected GDP growth and hotter-than-expected CPI print.
“This signals RBA’s intent to keep its powder dry to avoid reigniting inflation and preserve flexibility heading into 2026,” Haron said.
“However, the market is primed for the hold decision across both home and commercial lending… a steady rate can give borrowers and brokers some breathing space to plan, and that’s good news for the market as we move into the new year.
“Looking ahead, the RBA may act more decisively in early 2026 if conditions continue to soften. Brokers should stay engaged with clients and help them prepare for potential rate changes as we enter what could be a very active period.”
Simon Bednar, the CEO of aggregator Finsure, had predicted a rate hold, given the latest inflation data.
“Quarterly inflation figures came in higher than expected and while the unemployment rate has risen, there is still concern over the reigniting of the housing market,” Bednar said.
The RBA next meets to discuss interest rates on 8–9 December.
[Related: Inflation accelerates, dimming hopes of November rate cut]
