Australia's jobless numbers are staying put, with unemployment holding steady for another month.
The Australian Bureau of Statistics (ABS) reported the national unemployment rate remained unchanged at 4.1% for May 2025.
The total number of employed people dipped by 2,500 in May. An increase of 38,700 full-time jobs was offset by a 41,100 drop in part-time roles. Meanwhile, the participation rate held firm at 67.0%, unchanged from April.
While the Reserve Bank of Australia (RBA) has already delivered two cuts to the official cash rate this year — bringing it down to 3.85% — the nation's persistently low unemployment figures point to a labour market tight enough to give the central bank confidence to consider further easing. A steady jobless rate is seen as neither fuelling inflation nor undermining the recovery, reinforcing the case for an additional rate cut in the near term.
Inflation will also play a key role in the RBA’s next move. In the March quarter, the consumer price index's (CPI) trimmed mean inflation rate eased to 2.9%, down from 3.3% in December 2024, and back within the bank's 2% to 3% target range. It’s the softest inflation reading in three years.
Meanwhile, all four of Australia's Big Four major banks are placing bets on another rate cut before year end — time is the only debate. ANZ, Commonwealth Bank (CBA) and Westpac anticipate the next cut will come in August, with Westpac expecting the cash rate dropping to 2.85% by early 2026.
Belinda Allen, CBA senior economist, said: "We continue to acknowledge the balance of risks have shifted towards a July cut given the dovish nature of the May Board meeting. Our base case though remains August after the full quarterly CPI."
National Australia Bank (NAB), however, anticipates a cut at the central bank's July meeting.
“We forecast a cut at the next meeting in July, followed by another in August, and a final cut in November," said NAB Chief Economist Sally Auld. "That will give another 75 basis points of rate cuts, and I think [we] should see monetary policy far more appropriate given underlying fundamentals."
Either way, that's welcome news for mortgage holders battling rising living costs, while first-home buyers continue to face steep rents and limited supply. A rate cut could shave hundreds off monthly repayments, with lenders typically following the RBA’s lead by trimming their own variable rates. More than 65 lenders have reduced their own rates since the last RBA cut. That flow-on effect lifts consumer confidence, supports the economy and gives buyers and investors a clearer path into the market, with greater borrowing power to match.
Lower rates also tend to fuel lending activity and bank competition, giving borrowers more choice. It’s also a win for existing homeowners, with stronger demand helping lift property values. For brokers, it opens the door to more deals, especially as refinancings pick up. But there’s a catch: if the market heats up too fast, metro housing prices could inflate beyond reach.
The RBA's next meeting on monetary policy is scheduled for July 7 and 8.
