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Australia: Central Bank leaves rates unchanged in November
Latest bank decision: At its November meeting, the Central Bank decided to leave the cash rate at 3.60%, following 75 basis points of cuts earlier in the year.
Inflation concerns motivate hold: Inflation has ticked up in recent months to above the Central Bank’s 2.0–3.0% target, and has been higher than the Bank expected. This, coupled with recovering domestic economic activity and the Bank’s desire to assess the impact of past rate cuts, likely motivated the hold.
Rate cuts to continue: The Bank’s forward guidance was open-ended. Most of our panelists anticipate further monetary easing next year as inflation pulls back, with our Consensus for a terminal cash rate of around 3% in the longer term.
Panelist insight: On the outlook, EIU analysts said:
“We still expect inflation to slow in the coming quarters, owing to a combination of some temporary factors that pushed it up in mid-2025 (such as the end of electricity rebates), as well as an expected mild disinflationary impact from US trade tariffs and the impact of a softening labour market. This, we believe, will enable the RBA to resume cutting rates either in March 2026 or in the second quarter of the year. Regardless of the precise timing, we believe that the majority of the rate-cutting cycle is complete.”
