Inflation, employment data sealed the deal for latest Monetary Policy Board decision
The Reserve Bank of Australia (RBA) under Michele Bullock (pictured) has delivered on market expectations by keeping the case rate at 3.6%.
All banking majors expected the RBA to deliver a Melbourne Cup Day hold, thanks to stubborn inflation.
Inflation data came in hotter than expected in the September quarter, with consumer prices rising 3% year-on-year. Following the 29 October inflation print, the RBA rate Tracker increased the odds of a hold from 61% to 93%.
Belinda Allen, Commonwealth Bank’s head of Australian economics, accurately predicted a more “hawkish tone” from the RBA today, in order to prevent a further resurgence in price growth.
Despite unemployment rising to 4.5%, Allen noted that the labour market remains “slightly tight”, making a rate reduction improbable without a broader cooling in demand.
With no further RBA meetings scheduled for the year, the cash rate will stay put through to 2026.
The jury is out on what is in store for the year ahead; while ANZ and Westpac have left the possibility of a February 2026 rate cut on the table, NAB does not expect another move until May 2026.
MPA will update with further RBA commentary and broking industry reactions to today’s decision, shortly.
