RBA Keeps Rates Steady at 3.60% Amid Rising Inflation and Global Risks
Australia’s central bank held interest rates unchanged on Tuesday, balancing concerns about rising inflation with signs of a recovering economy and lingering global uncertainty.
The Reserve Bank of Australia (RBA) kept its cash rate steady at 3.60%, in line with expectations. The central bank had paused its easing cycle in September following a 25 basis-point cut in August.
Inflation Rises Faster Than Expected
In its policy statement, the RBA said inflation “picked up” during the September quarter, with trimmed mean inflation increasing 1.0% for the quarter and 3.0% year-on-year — both higher than the August projections.
Headline inflation also climbed to 3.2%, partly due to the expiry of electricity rebates in several states. While some of this increase was attributed to temporary factors, the central bank warned that underlying price pressures remain persistent.
The RBA expects core inflation to stay above 3% in the near term before gradually easing to around 2.6% by 2027, assuming another rate cut in 2026.
“Given the evidence of more persistent inflation, the Board judged it appropriate to remain cautious,” the RBA said, adding that it will continue to monitor incoming data closely.
Market Reaction and Economic Outlook
The Australian dollar (AUD/USD) was largely unchanged after the announcement, while the S&P/ASX 200 stock index held earlier losses, trading 0.7% lower as of 04:01 GMT.
The central bank noted signs of strengthening private demand and housing activity as the effects of earlier rate cuts work through the economy. However, it described the labor market as still “a little tight,” with unemployment at 4.5% in September.
Global Factors and Policy Stance
The RBA also cited global risks — including geopolitical tensions, trade policy shifts, and slower global growth — as key considerations in its decision to maintain a cautious policy stance.
Tuesday’s decision was unanimous, with the RBA reaffirming its commitment to price stability and full employment as it navigates a challenging global environment.
