Stubborn inflation guides Monetary Policy Board to unsurprising decision
The Reserve Bank of Australia (RBA) has matched market expectations by keeping the cash rate unchanged at 3.6%.
Economists at each of the Big Four banks were unanimous in their expectation of a September hold, following the 25-basis-point rate cut in August.
Inflation also returned to a 12-month high in September, legitimising the hawkish faction of the Monetary Policy Board that wants a data-driven approach to decision making.
Attention now turns to the next RBA call in November. The banking majors have differing opinions of what will happen at that meeting.
NAB has pushed its forecast for the next rate cut to May 2026, following those stronger-than-expected inflation figures earlier in the week.
CBA sees the cash rate dropping to 3.35% by year end, but admits the data may delay that move.
Westpac has pulled back its near-term expectations, citing stubborn inflation in services. ANZ now predicts the RBA will hold through 2025 unless labour market conditions worsen.
CBA, however, is also growing hawkish, warning that a November cut is “by no means guaranteed and will be highly dependent on the data flow from here”.
