The Reserve Bank of Australia (RBA) kept interest rates steady at 4.35% during its November 4–5 meeting, marking a year without changes. While no immediate action is planned, the RBA emphasized readiness to adjust rates as economic conditions evolve.
In minutes of its November 4-5 board meeting, the RBA explored scenarios where rates might need to be cut, raised, or held steady. A sharp and sustained drop in inflation could justify a rate cut, but the bank requires consistent quarterly data to confirm this trend. Alternatively, if inflation remains high or the economy’s supply capacity tightens due to stagnant productivity, a rate hike might be necessary.
Currently, headline inflation has slowed to 2.8%, aided by government electricity rebates, though underlying inflation is still elevated at 3.5%. The RBA expects inflation to return to its 2–3% target by 2026. Despite weak consumer spending, supported by card data, the labor market remains strong, with unemployment steady at 4.1% for six months.
The central bank is also monitoring external factors, including U.S. economic policy changes and China’s stimulus measures, to assess potential impacts on Australia’s economy. Markets have not fully priced a cut in rates until May next year, but a majority of economists still look for a rate cut in February.