RBA May Hold Rates at 3.6% as Australian Dollar Leads Amid Persistent Inflation

• RBA officials anticipate no changes to the cash rate, focusing on monitoring inflation trends that exceeded forecasts.

• Consumer prices have risen beyond predictions, prompting a cautious approach to monetary policy adjustments.

• Overnight-indexed swaps indicate a potential rate pause until May 2026, with core inflation hitting the upper end of the 2-3% target range.

Discover the RBA’s latest interest rate decision and its implications for Australia’s economy in this in-depth analysis. Stay informed on inflation trends and policy shifts—read now for expert insights.

What is the expected RBA interest rate decision for November 2025?

The RBA interest rate decision for the November 3-4, 2025 meeting is anticipated to maintain the cash rate at 3.6%, as officials navigate heightened uncertainty in the economic landscape. Sources close to the matter indicate that Governor Michele Bullock will avoid providing forward guidance, reflecting the volatile conditions. This stance follows recent data showing inflation accelerating more than expected, underscoring the central bank’s commitment to price stability.

How is persistent inflation influencing RBA policy?

Persistent inflation remains a core concern for the RBA, with recent figures revealing a 1% surge in core inflation during the third quarter of 2025, up from a revised 0.7% in the prior period. This marks the highest level within the bank’s 2-3% target band, driven largely by sticky services inflation that defies quick resolution. According to Assistant Governor Sarah Hunter, RBA staff are rigorously analyzing these trends to refine forecasts for the upcoming Monetary Policy Statement. Expert Sam Konrad, an Investment Manager for the Asian Equity Income strategy at a Singapore-based firm, noted the challenges: “Looking at the Australian economy, there are mixed signals, so I don’t think there’s an urgent need to reduce rates further from here. They must ensure inflation stays under control.” This widespread inflationary pressure, evident across multiple sectors, validates the RBA’s worries about its durability, potentially delaying any easing measures. Economists like George Tharenou from UBS AG have highlighted that the underlying momentum of inflation exceeds initial projections, raising questions about the timing of future rate adjustments. The board’s decision will be announced at 2:30 p.m. Sydney time on November 4, 2025, accompanied by quarterly economic forecasts and a subsequent press conference led by Governor Bullock. Investors are watching closely for any dissenting views among board members, though consensus points to continuity. This approach aligns with global peers, following the U.S. Federal Reserve’s recent rate cut, yet the RBA prioritizes domestic stability amid slowing job growth and fiscal stimuli like tax reductions and energy rebates boosting demand.

Frequently Asked Questions

What factors are driving the RBA’s decision to pause rate changes?

The RBA’s pause on rate changes stems from elevated inflation data, including a broad-based 1% rise in core measures, which has pushed prices to the top of the target range. Fiscal measures such as government tax cuts and energy rebates are fueling domestic demand, while surveys and derivatives like overnight-indexed swaps signal no adjustments until at least May 2026, ensuring sustained control over price pressures.

Will the RBA’s policy affect the Australian dollar’s performance?

A steady RBA policy is likely to bolster the Australian dollar, which recently topped rankings as the strongest major currency due to the central bank’s firm stance and improved global risk sentiment. Analysts from TD Securities, including Alex Loo and Prashant Newnaha, attribute this to reduced U.S.-China trade tensions and a supportive economic environment, with credit growth and housing prices indicating non-restrictive financial conditions.

Key Takeaways

• Rate Hold at 3.6%: The RBA is set to maintain current levels, prioritizing inflation monitoring over immediate easing.
• Inflation Persistence: Core inflation’s 1% quarterly rise highlights ongoing challenges, particularly in services, influencing cautious policy.
• Currency Strength: The Australian dollar benefits from the RBA’s approach, gaining investor confidence amid positive economic signals.

Conclusion

As the RBA interest rate decision unfolds on November 4, 2025, the focus on combating persistent inflation through a steady 3.6% cash rate underscores the central bank’s dedication to economic balance. With core inflation trends and domestic demand shaping the outlook, Governor Bullock’s forthcoming statement will provide critical clarity. Stakeholders should monitor these developments closely, as they influence broader financial stability and currency movements in the region—preparing for potential shifts in monetary policy as global conditions evolve.