The Reserve Bank of Australia (RBA) has announced that it will keep the cash rate unchanged at 3.60 percent following its latest Monetary Policy Board meeting.
According to the Board, underlying inflation has slowed less than previously anticipated. While inflation has dropped significantly since its peak in 2022, recent data indicate that figures for the September quarter may be higher than forecast in August. Both headline and trimmed mean inflation were within the RBA’s target range of 2–3 percent during the June quarter.
The RBA noted signs of recovery in domestic economic activity, with private demand picking up more quickly than expected and becoming the main driver of growth. The housing market is also strengthening, reflecting the impact of recent interest rate reductions. Credit remains accessible for both households and businesses.
Labour market conditions have remained broadly steady but slightly tight in recent months. Employment growth has slowed more than anticipated, though the unemployment rate held steady at 4.2 percent in August. Measures of labour underutilisation are still low, while business surveys suggest little change in labour availability recently. Wages growth has moderated from its peak, but productivity gains have been weak and unit labour costs remain high.
The Board acknowledged ongoing uncertainties about both domestic and international factors affecting economic activity and inflation. Domestically, stronger-than-expected growth and inflation could reflect greater consumer confidence as real incomes rise; however, this trend might not continue if concerns about overseas developments increase.
Globally, uncertainty remains elevated due to trade policy changes and geopolitical risks. Although there is now more clarity regarding US tariffs and related policies elsewhere, these issues are still expected to dampen global economic growth over time.
"There are also uncertainties regarding the lags in the effect of recent monetary policy easing, the balance between aggregate demand and potential supply for goods and services, conditions in the labour market and the outlook for productivity."
With financial conditions having eased since early 2025 but ongoing uncertainty around how previous cash rate reductions will play out fully in the economy, "the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting." The statement continued: "Financial conditions have eased since the beginning of the year and this seems to be having some impact, but it will take some time to see the full effects of earlier cash rate reductions."
The RBA said it would closely monitor data on global economic trends, domestic demand patterns, inflation expectations, and labour market developments when making future decisions.
"The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome."
Today’s decision was made unanimously by all members present.