RBA keeps rates unchanged as inflation gallops ahead – realestate.com.au

The Reserve Bank of Australia has kept cash rates steady at 3.6% in November after warmer-than-expected inflation data, dealing a blow to households hoping for a cut on Melbourne Cup Day.

Higher-than-expected inflation figures released last week showed the consumer price index (CPI) rose 1.3% during the September quarter to an annual rate of 3.2%, above the RBA’s inflation target of 2-3%.

The RBA’s preferred inflation measure, the trimmed average – which takes out one-off and volatile price movements – also rose by a full percentage point during the quarter to an annual rate of 3%, which is at the upper end of the inflation target.

A surprise rise in the unemployment rate to 4.5% in September had fueled expectations that the RBA could make another cut this year, although RBA Governor Michele Bullock allayed those concerns at an appearance last week, saying she will not “jump to a single figure” as monthly data can be volatile.

Since the bank’s last meeting five weeks ago, consumer spending has continued to rise.

At a press conference after the decision, RBA Governor Michele Bullock said the RBA was not considering a rate cut at this month’s meeting.

“We really just talked about holding and the reasons for holding, and then discussed the strategy – depending on which way to go,” Ms Bullock said.

“Of course the board is also concerned about employment, because that is part of their mandate, but I would say that at the moment we are a bit more concerned about getting inflation back in on a sustainable basis.”

She said the excessive rise in inflation during the September quarter would impact the annual inflation rate for the next 12 months, meaning inflation would remain above the target range of 2-3%.

“So [inflation] There’s a three in it, which isn’t ideal.”

During today’s meeting, the Board of Directors decided to leave the cash interest rate unchanged at 3.60 percent.

Read the full statement here: https://t.co/a0knswZloW pic.twitter.com/nyKR5tb1Ad

— Reserve Bank of Australia (@RBAInfo) November 4, 2025

Prior to the decision, financial markets had only priced in a 7% chance of a rate cut in November, while economists at the major banks no longer see a chance of another cut this year.

REA Group senior economist Eleanor Creagh said the RBA has announced a watchful pause following the shock inflation data, although a pause will not be enough to maintain house price growth.

“The RBA will need clear evidence that inflationary pressures are easing before cutting rates again. The Bank remains cautious and data-driven, but mindful that policy is already restrictive and that the labor market is gradually cooling,” Creagh said.

It comes a day after PropTrack data showed national home prices rose for the 10th straight month in October to a new record high, with earlier rate cuts boosting borrowing power and buyer confidence.

“Interest rates have moved lower this year, easing pressure on households and boosting confidence throughout the spring,” she said.

“That has helped propel the national rebound to a tenth month in a row, with house prices now 7.5% higher than a year ago, the fastest annual pace since May 2024.”

Whiplash for borrowers

Although there has been a heavy push over the past week, expectations about whether interest rates could be cut have been up and down throughout October.

Lenders and economists had largely predicted the bank’s rate-cutting cycle would come to an end in 2025 after the bank’s September meeting.

Economists at National Australia Bank now do not expect another rate cut until the middle of next year, while the CBA has ruled out further cuts for this cycle.

Economists do not expect another interest rate cut this year. Photo: Getty

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The hottest period in the market has also been tempered by uncertainty among sellers and buyers as the tight labor market continues. The RBA’s predictions for the future economic path have also looked increasingly less certain in recent weeks.

As the country heads into the traditional spending season of Black Friday and Christmas, Ms Bullock will be keeping a close eye on consumer activity and what impact that will continue to have on inflation next year.

House prices are rising

Ms Bullock has continued to raise concerns about high housing costs in Australia in recent months, with values ​​now reaching another record high.

PropTrack’s home price index for October shows the market is still trending upward. House prices rose 0.6% in October, extending the rebound to a tenth straight month and leaving values ​​7.5% higher than a year ago.

Sydney and Brisbane remain the most expensive capital cities to buy a home, with average values ​​of $1.2 million and $976,000 respectively.

Economist Eleanor Creagh of the REA group says the previous three rate cuts have supported house price growth.

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With prices rising, Mortgage Choice CEO Anthony Waldron said the recent expansion of the government’s home guarantee scheme could also disrupt the RBA’s expectations for the market.

An increasing number of buyers are now vying to purchase homes, with the scheme now allowing buyers of all salaries to access the market with as little as a 5% deposit.

“Competition in the real estate market is increasing,” said Mr Waldron. “On the one hand you have a new group of first home buyers who are motivated to get their foot on the property ladder thanks to the government’s extended 5% deposit scheme.

‘And on the other side you have investors, with both groups often looking for the same properties.

The activity of first home buyers is increasing as a result of the expansion of the Home Guarantee Scheme. Photo: Getty

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“My message to anyone looking to buy is simple: don’t wait for the RBA. A rate cut may not come until the RBA is satisfied that the consumer price index is firmly within the target range.”

Will there be a December reduction?

If rates are cut in December, it will be the first time Australians have seen four cuts in one calendar year since 2012. However, the bank rarely changes the cash rate in December due to the instability of spending during the month.

Any move, cut or increase, could cause unnecessary volatility, meaning borrowers will most likely have to wait until the new year.

The bank will meet on December 9 for the last cash rate decision of the year.