2025-11-04 03:30:00
Bets for a Reserve Bank of Australia rate cut jumped after soft jobs data but were cut back again after inflation data came in hot. The consensus was for no rate cut today, which is what we have.
more to come
The Reserve Bank of Australia sharply raised its core inflation forecasts in its November Statement on Monetary Policy, warning that price pressures will stay above target until the second half of 2026 and that the economy may be running hotter than previously thought.
The central bank said recent data suggest “there could be more excess demand in the economy than earlier estimated”, with stronger household consumption, a faster rebound in house prices, and still-tight labour conditions all contributing to upside risks.
The RBA now expects trimmed mean inflation to average 3.2% through mid-2026,
- easing to 2.7% by December 2026
- and 2.6% by the end of 2027.
It sees headline CPI peaking at 3.7% in June 2026,
- before moderating back within the 2–3% target band by late 2027.
The upward revisions reflect what the RBA described as a “hump” in inflation stemming from the Q3 CPI jump, which it expects to persist until mid-2026.
Policy assumptions underpinning the outlook include a cash rate of 3.6% through end-2025, drifting slightly lower to 3.4% in mid-2026 and 3.3% thereafter, suggesting the RBA expects to hold policy in mildly restrictive territory for longer.
On growth and employment, the bank forecasts GDP expanding around 2% annually through 2027, with unemployment steady near 4.4% and wage growth easing from 3.4% in 2026 to about 3% by end-2027. It noted that financial conditions have eased since the August rate cut, with policy now “closer to neutral” but still acting to contain demand.
The RBA also said global trade uncertainty has had limited impact on Australia so far, while domestic conditions appear firmer than expected, led by a rebound in consumption and property prices.
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Background to this:
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Still to come is Reserve Bank of Australia Governor Bullock’s press conference, due to begin at 3.30 pm Sydney time:
- 0430 GMT
- 2330 US Eastern time
