Understanding the Decision
The Reserve Bank of Australia board voted unanimously on November 4, 2025, to maintain the official cash rate at 3.6 per cent, marking the second consecutive pause in rate adjustments. This decision reflects a fundamental shift in monetary policy priorities as inflation pressures resurface across the economy. Following three rate cuts earlier in 2025—in February, May, and August—the RBA has signaled a more cautious stance, prioritizing price stability amid persistent cost-of-living challenges for Australian households.
The decision came just days after consumer price inflation accelerated to 3.2 per cent annually in the September quarter, exceeding market expectations and eliminating hopes for further near-term rate relief. RBA Governor Michele Bullock made clear the central bank’s assessment: ongoing inflation pressures require a holding pattern while evidence accumulates about whether recent price movements represent temporary disruptions or sustained economic pressures.
What the RBA Board Decided
- Unanimous Hold: All board members voted to keep the cash rate steady at 3.6 per cent with no discussion of cuts or increases at the meeting
- Higher Inflation Path: The RBA now forecasts underlying inflation to rise above 3 per cent in coming quarters, peaking at 3.2 per cent by December 2025 before declining to 2.6 per cent in 2027
- No Rate Cuts Guaranteed: Governor Bullock stated it is “possible there will be no further rate cuts” and that “anything is possible” regarding future policy direction
- Persistent Pressures: The board cited “mixed signals on the tightness of financial conditions” and evidence suggesting “inflationary pressure may remain in the economy”
- Quarterly Shock: The 1.3 per cent quarterly rise in consumer prices was the highest increase since March 2023, with electricity costs rising 9 per cent alone
Inflation Forecast Path
Interest Rate Outlook
Economic Impact Assessment
What Experts Are Saying
Governor Michele Bullock’s Key Comments
“The central forecast has underlying inflation rising above 3 per cent in coming quarters before settling at 2.6 per cent in 2027. We still judge we are marginally on the tight side, and there is still a little tightness taking heat out of the economy. But the forecasts only come back down to 2.6 per cent, so the board will have to wait and see.”
“It is possible there are no more rate cuts, possible there are more. At the moment, all I would say is that I think we’re at the right spot we need to be at the moment and we can respond where the risks arise.”
— Reserve Bank of Australia, November 4, 2025
Key Takeaways
- The RBA prioritizes inflation control and stability over immediate employment relief in the near term
- December’s meeting becomes critical as new monthly inflation data and labour statistics will inform future decisions
- Market economists now anticipate no rate cuts through the end of 2026, with some forecasting cuts only from mid-2026 onwards
- The labour market is showing signs of gradual cooling, creating a policy dilemma for balancing competing economic objectives
- Australians should not expect mortgage relief in the near term; rate relief is likely to remain elusive through 2026
- The transition to monthly CPI reporting beginning November 2025 provides policymakers with more timely inflation signals for faster decision-making
What Comes Next
The RBA’s November decision represents a turning point in Australia’s monetary policy cycle. With inflation resurfacing above the 2-3 per cent target band and showing signs of persistence rather than transience, the central bank has adopted a cautious holding pattern. The unanimous board decision to maintain rates reflects genuine uncertainty about economic conditions, particularly regarding the sustainability of recent price pressures in housing and services sectors.
The coming months will prove decisive. The RBA will reconvene on December 8-9, 2025, for its final meeting of the year, armed with fresh economic data. The transition to monthly Consumer Price Index reporting beginning this month provides more granular and timely inflation signals, potentially enabling quicker policy responses. Labour market developments, housing cost dynamics, and international economic conditions will all influence the RBA’s calculus heading into 2026.
For Australian households, the message is clear: relief from elevated interest rates is not imminent. Mortgage holders should plan for an extended period at current or potentially higher rates, while consumers navigating persistent inflation should prepare for continued cost-of-living pressures. The RBA’s cautious stance reflects the complexity of managing an economy caught between inflation persistence and employment softening—a balance the board will continue striking on a month-by-month basis.
Stay Informed on Monetary Policy
The RBA’s December 8-9 meeting will be critical. New monthly CPI data, labour market statistics, and international economic developments will shape the next policy decision. Subscribe to receive updates on central bank decisions affecting Australia’s economy.
