Christmas rate relief off the table at last RBA meeting
Mortgage holders are not expected to receive an early Christmas present from the Federal Reserve; Cutting interest rates is almost off the table.
The central bank will begin two days of talks on Monday at its final board meeting of the year, after which the official cash rate is expected to remain at 3.6 percent.
Tuesday’s interest rate decision comes after the Central Bank started 2025 with an interest rate cut, followed by two interest rate cuts during the year that brought welcome relief to borrowers in the cost of living.
However, the increase in the consumer price index eliminated the possibility of another interest rate cut.
“October’s hot inflation reading suggested the RBA’s current policy easing was over after three rate cuts,” CommSec chief economist Ryan Felsman said.
Latest data showed annual inflation rose to 3.8 percent from 3.6 percent in the previous month, well above the Central Bank’s target range of two to three percent.
Reduced average inflation, which eliminates volatile price movements and is the central bank’s preferred measure, stood at 3.3 percent in the 12 months to October.
The increase in house prices and the end of government discounts on electricity prices were blamed for the increase.
NAB economist Taylor Nugent said the Central Bank is still expected to keep interest rates steady, but there may be signs to watch after Tuesday’s meeting.
“We expect a more hawkish tone in the accompanying statement and press conference,” he said.
“There has been a further shift in the distribution of risks to the monetary policy outlook, with the October CPI showing further widening inflation pressures and signs of acceleration in private demand.”
Westpac economists are still optimistic about another cut in interest rates in 2026.
If inflation eases, the bank plans to reduce interest rates in May and August.
Labor force figures for November will be released on Thursday, with CommSec economists predicting the unemployment rate of 4.3 per cent will remain steady and the Australian economy will add around 25,000 jobs for the month.
The labor force participation rate is expected to remain stable at 67 percent.
U.S. stocks rose slightly on Friday as the release of delayed data raised expectations that the Fed could cut interest rates soon.
The Dow Jones Industrial Average rose 104.05 points, or 0.22 percent, to 47,954.99 points, while the S&P 500 gained 13.28 points, or 0.19 percent, to 6,870.40 points.
The tech-heavy Nasdaq Composite rose 72.99 points, or 0.31 percent, to 23,578.13 points.
Australian stock futures were slightly lower at 8620, down 13 points or 0.15 per cent.
Local shares gained for a second consecutive week, with the S&P/ASX200 index gaining 16.2 points on Friday, rising 0.19 per cent on the day to 8,634.6.
More broadly, the All Ordinaries rose 19.4 points, or 0.22 percent, to 8,926.1.
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