The Reserve Bank of Australia (RBA) has decided to keep the cash rate steady at 4.35% during its latest policy meeting, held on November 4, 2025. This marks the eighth consecutive month without a rate change, as the central bank signaled cautious optimism that inflationary pressures are gradually easing across the Australian economy.
RBA’s Latest Interest Rate Decision
In its official RBA media release, the central bank stated that “inflation continues to moderate but remains above the target range of 2–3%.” The RBA decision to hold the rate reflects growing confidence that prior monetary tightening has begun to curb spending and cool the housing market.
Governor Michele Bullock emphasized that the Board remains vigilant:
“The RBA is committed to returning inflation to target within a reasonable timeframe while preserving employment gains achieved in recent years.”
The RBA interest rate decision came as no surprise to most analysts, with major banks such as ANZ and Commonwealth Bank predicting a continued pause until at least the first half of 2026.
Inflation Outlook and Economic Data
Recent data from the Australian Bureau of Statistics (ABS) showed that annual inflation fell to 3.4% in the September quarter, down from 3.8% in June. Price pressures have eased in key sectors such as fuel, construction, and food. However, services inflation remains persistently high, driven by rent increases and healthcare costs.
The RBA noted that while progress has been made, inflation “is not yet comfortably within the target range.” The bank expects inflation to return to the target by mid-2026, assuming no major global shocks.
The RBA announcement also pointed to signs of slower consumer spending, weaker housing demand, and a softening labour market, suggesting that the economy is adjusting to higher borrowing costs.
RBA’s Forward Guidance
The RBA meeting minutes reveal that policymakers debated whether another rate hike might still be necessary if inflation proves stubborn. However, they ultimately agreed that the current monetary stance is “restrictive enough” to achieve disinflation without triggering a recession.
“The Board will not hesitate to adjust the RBA cash rate if inflation expectations become unanchored,” the statement added.
Market economists interpret this as a signal that the RBA may hold rates steady through early 2026 but could consider rate cuts later in the year if inflation continues to decline and growth slows further.
Economic Growth and Employment
Australia’s economy grew just 0.4% in the second quarter of 2025, highlighting the toll of higher interest rates on households and businesses. Wage growth has moderated slightly, while unemployment has edged up to 4.2%, its highest level since early 2023.
Despite these challenges, the RBA remains confident that the economy is on a sustainable path. The RBA interest rate decision underscores a delicate balance: supporting growth while ensuring inflation does not reignite.
Housing and Mortgage Implications
For homeowners, the RBA’s move means no change to mortgage rates—welcome news for millions of Australians who have faced the steepest rate tightening cycle in decades. Variable home loan rates will remain around 6.5% on average, keeping pressure on household budgets but providing some relief compared to the fears of another hike.
The RBA interest rate pause may also help stabilize the housing market, which has shown mixed signals. While property prices in Sydney and Melbourne have flattened, regional markets continue to experience modest gains.
Global Context
The RBA decision comes amid similar moves by other central banks, including the US Federal Reserve and the Bank of England, which have also paused rate hikes. Global inflation trends and geopolitical risks—particularly energy price volatility—continue to influence RBA policy.
The Reserve Bank of Australia noted that it is closely monitoring developments in China and the US, given their impact on Australian exports and the broader economy.
What Comes Next
Economists predict that the RBA will likely maintain its cautious stance until at least mid-2026. The RBA announcement today reinforces the central bank’s patient approach—balancing inflation control with the need to protect employment and consumer confidence.
“The worst of the inflation battle appears behind us, but victory isn’t yet assured,” said economist Sarah Hunter of KPMG Australia. “The RBA will want several more months of consistent inflation data before even considering rate cuts.”
Conclusion
The RBA interest rate decision to hold at 4.35% marks another step in Australia’s path toward economic stability. While challenges remain—particularly in the housing and services sectors—the central bank’s cautious optimism suggests that inflation is gradually being tamed without derailing growth.
As the RBA meeting outcomes continue to shape business sentiment and market forecasts, Australians can expect steady—if slow—progress toward lower inflation and potentially lower rates by next year.
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