Mortgage rates likely to stay put following hotter-than-expected CPI print
Year-on-year inflation increased to 3.2% in the third quarter of 2025, overshooting market forecasts of a flat 3%. It marks the highest rate of annual inflation since the second quarter of 2024.
Trimmed mean inflation, the Reserve Bank of Australia's (RBA) preferred inflation metric, increased to 3%, overshooting the 2.7% market forecast. The consumer price index (CPI) also came in above forecasts.
The data likely puts to bed any hopes of an interest rate cut next Tuesday.
RBA governor Michele Bullock (pictured) and the rest of the Monetary Policy Committee (MPC) will convene next Tuesday to determine whether interest rates should stick or twist.
Economists at the major banks broadly expect the cash rate to stay put until 2026.
In September, Commonwealth Bank economists postponed their next rate cut forecast to February 2026, citing a combination of firmer inflation, robust consumer activity and a resilient labour market.
NAB has turned particularly hawkish, not expecting another cut until May 2026, having previously forecast two reductions – one in November and another in February.
As of 28 October, the market has placed a 61% chance of interest rates staying put next week, per the RBA rate indicator, which bases its assumptions on the market determined prices in the ASX 30 Day Interbank Cash Rate Futures.
As for the mortgage market, variable rates are unlikely to change significantly if the market’s expectations of a November hold prove accurate.
