The Reserve Bank of Australia (RBA) has opted to hold interest rates at 3.60%.
The widely-expected move aligns with the central bank’s wait-and-see approach, opting to wait on incoming data before making further decisions on monetary policy.
The bank based its unanimous decision on higher-than-expected inflation and continued economic uncertainty, both at home and abroad.
"There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments," the RBA said in a statement. "On the domestic side, stronger-than-expected data on growth and inflation may indicate that households have become more comfortable consuming as real incomes and wealth rise. If this continues, it may make it easier for businesses to pass on cost increases and lead to more demand for labour.
"Uncertainty in the global economy remains elevated," the board continued. "Beyond tariffs, a broader range of geopolitical risks remain a threat to the global economy. This could all weigh on growth in aggregate demand and lead to weaker labour market conditions in the domestic economy."
The RBA has slashed rates three times in 2025: in February, May and August. Changes in monetary policy have come as a welcome relief to mortgage holders and investors alike, many of whom are grappling with rising living costs, surging property prices and a persistent housing shortage.
Still, RBA Governor Michele Bullock has made it clear that the central bank's board remains cautious about further rate cuts, citing ongoing domestic and global economic uncertainty. It reiterated the need for inflation to stabilize within its 2% to 3% target range before shifting further.
The last quarterly consumer price index (CPI), in June, confirmed that inflation continues to trend downward. Both headline CPI and trimmed mean inflation declined over the quarter, with annual CPI easing to 2.1%, down from 2.4% in the previous period. Trimmed mean inflation fell to 2.7%, compared with 2.9% in the prior quarter.
August’s monthly CPI data – generally seen as a less precise indicator of underlying core inflation – still raised concerns as inflation edged up to 3%.
Unemployment, meanwhile, remains historically low in August at 4.2%. But some economists said the jobs market appears to be tightening slightly – up from 4.0% at the start of the year.
Bullock grabbed market attention again earlier this month when she said stronger-than-expected consumer spending could add to inflationary pressures and delay further interest rate cuts.
Consumer spending rose two points during the last week of August, according to the latest ANZ-Roy Morgan Survey. This was followed by two consecutive weeks of declines, before a 1.7-point rebound the week ending 28 September.
