Reserve Bank of Australia Holds Cash Rate at 3.6 Percent

The Reserve Bank of Australia (RBA) has left the cash rate on hold at 3.6 percent, keeping policy steady after three cuts earlier this year.

The board said inflation has eased sharply from its 2022 peak but warned progress is slowing.

Both headline and trimmed mean inflation were inside the 2–3 percent target band in the June quarter. But early September data suggest price pressures may be stronger than expected.

However, in its post-meeting statement on Sept. 30, the board said that “Recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August statement on monetary policy.”

The pause follows a 25-basis-point reduction in August, which took the cash rate down from 3.85 percent. That was the third cut in 2025, lowering rates by a total of 75 basis points this year.

Growth and Jobs Outlook

The RBA pointed to signs that the economy is picking up again.

Families are starting to spend more as household incomes improve and borrowing costs come down.

The housing market is showing fresh activity, suggesting earlier rate cuts are having an effect. Banks are also continuing to lend to both households and businesses.

Jobs growth has slowed a little faster than expected, but unemployment stayed steady at 4.2 percent in August.

Wages are no longer rising as quickly as before, though weak productivity means costs for employers are still high—something the RBA is watching closely.

Governor Warns on Fragile Recovery

The decision comes a week after RBA Governor Michele Bullock cautioned senators that while inflation is back inside the target range for the first time in almost three years, the achievement is precarious.

Underlying inflation is now 2.7 percent, but Bullock said domestic and global risks could quickly reverse that gain.

“The global environment is particularly uncertain and unpredictable, but monetary policy is well placed to respond if it seems international developments could have a material impact on the Australian economy,” she told the committee.

She pointed to fragile conditions at home.

“There’s a risk that the recent pick-up in growth in domestic economic activity is not sustained, but on the other hand, it could be materially stronger than we anticipate,” she said.

Stronger demand or labour market outcomes, she added, could put pressure back on prices.

Bullock also highlighted overseas risks, including stubborn services inflation in the UK, tariff-driven costs in the United States, and rising unemployment in Canada.

“We’ve made real progress in bringing inflation down, but our job is to make sure it stays within its target range in a way that’s sustainable, not just for now, but for the long term,” she said.