The Reserve Financial institution of Australia (RBA) stored the money charge unchanged at 3.60% in September, in a broadly anticipated choice that mirrored the central financial institution’s cautious method amid combined financial alerts.
The unanimous vote to carry got here as current knowledge recommended inflation is perhaps 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 larger than anticipated.”
The board emphasised it could stay data-dependent, stating it was “applicable to stay cautious, updating its view of the outlook as the information evolve.”
Key Takeaways:
- RBA held at 3.60% following three cuts in 2025 (February, Might, August)
- The choice was unanimous amongst board members
- August month-to-month CPI jumped to three.0% y/y from 2.8%, the very best since July 2024
- Q3 inflation “could also be larger than anticipated”
- Non-public consumption choosing up as actual incomes rise
- Housing market strengthening from the speed reduce results
- Credit score progress 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 yr’s 75 foundation factors of easing earlier than transferring once more.
In her press convention, Bullock careworn that “we’re in a really tough place with the property market” however emphasised the RBA should give attention to its inflation mandate. She warned that larger costs “have an effect on everybody” and reiterated that reducing inflation doesn’t imply deflation – “we’re reducing 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 reduce till Might 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 for the reason that Hong Kong and China market open, jumped broadly and sharply on the RBA’s maintain choice as merchants scaled again easing expectations.
The quick beneficial properties seemingly mirrored diminished odds of a near-term charge reduce after the RBA highlighted upside inflation dangers and enhancing home demand. With the central financial institution signaling it needs to see the total Q3 CPI report earlier than transferring once more, markets pushed again expectations for the following reduce from September to November or later.
The forex then pulled again throughout Bullock’s press convention, because the RBA chief reiterated the financial institution’s “cautious, gradual” method.
AUD’s dip after Bullock’s presser seemingly mirrored disappointment that she downplayed inflation dangers, saying “inflation will not be operating away” and calling the outlook “fairly optimistic” quite than pushing again in opposition to charge reduce 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 forex’s yield enchantment.
Finish-of-quarter flows might have additionally performed a component, particularly after the Aussie’s broad beneficial properties late final week.
The forex stays within the inexperienced, with the most important beneficial properties in opposition to USD, CAD, and CHF.
