Summary:
The Reserve Bank of Australia (RBA) held the cash rate steady at 3.6% during its October 2025 meeting. Governor Michele Bullock emphasized a cautious but optimistic outlook, citing signs of recovery in consumption and labour markets. Inflation remains within the target band, though pressures from services and housing persist. The RBA refrained from forward guidance, opting for a data-dependent approach. Markets and government commentary have shifted expectations, with fewer anticipating further rate cuts. The next policy decision will be informed by updated CPI data and labour market indicators in November
Market participants have recalibrated expectations, with fewer anticipating further rate cuts. The RBA acknowledged stronger-than-expected inflation data as a key driver of this shift. While the RBA did not directly reference government commentary, economists and markets have adjusted expectations. Earlier forecasts of further rate cuts have been tempered by stronger-than-expected inflation data.
The RBA will reassess conditions in November, incorporating new labour and inflation data. The transition to full monthly CPI reporting will enhance policy responsiveness. The following exhibit 3offers insight into sectored drivers of economic momentum.
The RBA will reassess in November, with new data on labour markets, inflation, and forward-looking indicators. The transition to a full monthly CPI from the ABS will also influence future decisions.
Figure 1: Market Expectation on Cash Rate
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Product Interest
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