RBA keeps cash rate steady at 3.6%, watches future inflation data closely, no relief in mortgage repayments

The Reserve Bank of Australia (RBA) decided to keep the official cash rate constant at 3.60% at its meeting on 4 November 2025, a continuation of the decision of the previous meeting. The move follows a 0.25% interest rate cut in August 2025 and signals the RBA’s cautious approach amid mixed inflation signals and economic uncertainty.

According to the RBA board’s statement, inflation has fallen significantly since its peak in 2022, and this decline is attributed to higher interest rates constraining aggregate demand and approaching potential supply.

However, recent data points to a surprising rise in inflation levels; Adjusted average inflation was recorded at 1.0% in the September quarter and 3.0% for the year overall; This is above the 2.7% seen in the June quarter. Headline inflation rose sharply to 3.2% over the year in the September quarter, partly due to the suspension of electricity rebates in some states.
Economists see the current inflation trend as a cause for concern. Belinda Allen, the CBA’s head of economics for Australia, stressed that a rise in inflation would likely prompt the RBA to adopt a more hawkish stance to avoid falling into higher inflation. This sentiment is supported by revised forecasts from major banks such as ANZ and NAB, which have lowered their expectations for near-term rate cuts through at least early to mid-2026.

In her recent statements, RBA Governor Michele Bullock emphasized that the recent decline in headline inflation may be temporary due to electricity rebates and warned that further interest rate cuts will largely depend on sustainable low inflation data.

The decision to keep interest rates steady means Australian homeowners and borrowers will not see immediate relief from their mortgage repayments; This has led to concerns about household budget pressures, with high mortgage costs continually squeezing finances. While a rate cut is expected eventually, the timing remains uncertain and many households will face financial stress during what is typically a festive spending season, consumer researchers said. The RBA also said it was monitoring the economy closely and policy would remain data-dependent, leaving the door open for future adjustments if inflation dynamics or labor market conditions change significantly. Current market prices suggest that the chances of easing before mid-2026 are minimal, reflecting the cautious economic outlook.