The Reserve Financial institution of Australia (RBA) saved the money fee unchanged at 3.60% in September, in a broadly anticipated choice that mirrored the central financial institution’s cautious strategy amid blended financial indicators.
The unanimous vote to carry got here as current knowledge steered inflation is likely to be proving stickier than anticipated.
The RBA struck a cautious tone, noting that “current knowledge, whereas partial and risky, recommend that inflation within the September quarter could also be greater than anticipated.”
The board emphasised it might stay data-dependent, stating it was “acceptable to stay cautious, updating its view of the outlook as the info evolve.”
Key Takeaways:
RBA held at 3.60% following three cuts in 2025 (February, Could, August)
The choice was unanimous amongst board members
August month-to-month CPI jumped to three.0% y/y from 2.8%, the best since July 2024
Q3 inflation “could also be greater than anticipated”
Personal consumption selecting up as actual incomes rise
Housing market strengthening from the speed minimize results
Credit score development accelerating to 7.2% yearly
Unemployment regular at 4.2% in August
Hyperlink to the official RBA Financial Coverage Assertion for September 2025
The central financial institution warned that “indications that inflation could also be persistent in some areas” justified holding regular. Governor Bullock emphasised the necessity to see the total results of this 12 months’s 75 foundation factors of easing earlier than shifting once more.
In her press convention, Bullock careworn that “we’re in a really troublesome place with the property market” however emphasised the RBA should deal with its inflation mandate. She warned that greater costs “have an effect on everybody” and reiterated that decreasing inflation doesn’t imply deflation – “we’re decreasing the speed at which costs are growing.”
Bullock refused to offer ahead steering, stating, “I’m not going to foretell what the rate of interest goes to be within the subsequent three to 6 months.”
Markets had broadly anticipated the maintain. NAB now sees no minimize till Could 2026, whereas Westpac maintains its November forecast.
Hyperlink to RBA Press Convention for September 2025
Market Response:
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart by TradingView
The Australian greenback, which had been leaning bullish because the Hong Kong and China market open, jumped broadly and sharply on the RBA’s maintain choice as merchants scaled again easing expectations.
The fast positive aspects seemingly mirrored decreased odds of a near-term fee minimize after the RBA highlighted upside inflation dangers and bettering home demand. With the central financial institution signaling it desires to see the total Q3 CPI report earlier than shifting once more, markets pushed again expectations for the following minimize from September to November or later.
The foreign money then pulled again throughout Bullock’s press convention, because the RBA chief reiterated the financial institution’s “cautious, gradual” strategy.
AUD’s dip after Bullock’s presser seemingly mirrored disappointment that she downplayed inflation dangers, saying “inflation just isn’t operating away” and calling the outlook “fairly constructive” fairly than pushing again towards fee minimize expectations.
Her refusal to offer ahead steering, whereas pointing to world uncertainties and the necessity for extra knowledge, was taken as leaving the door open for additional easing if situations soften, which dented the foreign money’s yield attraction.
Finish-of-quarter flows might have additionally performed a component, particularly after the Aussie’s broad positive aspects late final week.
The foreign money stays within the inexperienced, with the most important positive aspects towards USD, CAD, and CHF.
