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The central bank has announced the latest cash rate target today, on Melbourne Cup day, concluding its seventh monetary policy meeting of the year.
At its seventh monetary policy meeting of the year, the Reserve Bank of Australia (RBA) has held its horses and kept the cash rate steady at 3.60 per cent, leaving little relief to borrowers as the property market continues to climb.
The RBA’s decision to keep the cash rate unchanged was largely unsurprising, as major banks and economists had predicted it would remain unchanged following the September quarter Consumer Price Index (CPI) results.
The September quarter CPI rose 3.2 per cent, jumping from 2.1 per cent in the June quarter, according to the Australian Bureau of Statistics data.
Similarly, underlying annual inflation, or the trimmed mean, accelerated to 3.0 per cent for the September quarter, reaching the upper edge of the central bank’s 2-3 per cent target band.
The figures marked the first time trimmed mean annual inflation has increased since December 2022.
According to Domain’s chief of research and economics, Dr Nicola Powell, the RBA’s decision to hold reflected a more cautious stance, as stronger household spending and rising inflation had dampened hopes for a rate cut.
“Consumers are spending again, which is great for the economy, but it also raises the risk of persistent inflation,” Powell said.
“Put simply, the RBA can't move too quickly to cut rates, which will disappoint many hopeful buyers and mortgage holders.”
REA Group senior economist Eleanor Creagh said the decision to hold the cash rate was expected as the RBA needs clear evidence of easing inflation before any cut.
“The Bank remains cautious and data-driven, but mindful that policy is already restrictive and the labour market is gradually cooling.”
She said that lower interest rates over the last few months have already eased household pressure and boosted confidence, pushing home prices up 7.5 per cent year-on-year and fuelling renewed competition.
“Keeping rates steady won’t derail that recovery,” Creagh said.
“Earlier cuts and stronger confidence continue to support buyer demand, aided by population growth and the expansion of the Home Guarantee Scheme."
“With new supply constrained, these factors will keep upward pressure on prices, though affordability challenges mean the pace of gains is likely to remain slower than previous cutting cycles and vary across cities.”
Principal at Finni Mortgages Eva Loisance told REB that the RBA’s decision to hold the cash rate will support stable mortgage repayments and borrowing power, which steadies investor confidence but may soften buyer urgency and slow refinancing activity.
“At a macro level, we can still expect property prices to continue climbing as a rate hold supports ongoing price growth, especially in undersupplied markets. Lower rate volatility tends to fuel demand."
“We can also expect the rental market to tighten with fewer incentives to sell or build. I would also expect to see investors favouring high rental yield markets/low vacancy to compensate any risks or even consider renovations and Granny flats to boost return organically.”
Although dwelling prices are expected to keep rising, big banks and economists remain uncertain about the timing of the next rate cut.
Finder head of consumer research Graham Cooke said the RBA’s decision will provide little relief to households, with inflation returning and the board waiting for clearer progress before adjusting rates.
“Unless something unprecedented happens, we’re now looking at 2026 for the next rate adjustment,” he concluded.
Last week, several major banks revised their rate cut forecasts following higher-than-expected inflation.
Bendigo Bank and the Commonwealth Bank of Australia (CBA) now predict a final RBA rate cut in February 2026, while the Australian and New Zealand Banking Group (ANZ) expects rates to remain on hold until at least February 2026, and National Australia Bank (NAB) is pencilling in a possible cut in May 2026.
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