Grim interest rate forecast for the next nine months for Aussie mortgage-holders as Reserve Bank makes unanimous decision
The Reserve Bank of Australia has held interest rates steady after a surprise surge in inflation potentially spelled the end of the cutting cycle.
The unanimous decision leaves the cash rate at 3.6 per cent after 75 basis points of easing since February.
Borrowers now face the possibility that the RBA may actually raise rather than lower rates in February next year.
Underlying or trimmed mean inflation, which is the Reserve Bank’s preferred measure, jumped one per cent in the September quarter, which was materially higher than the bank’s forecasts, governor Michele Bullock said in October.
Despite unemployment also rising to 4.5 per cent in September, money markets significantly lowered the odds for further rate reductions after last week’s consumer price index print.
Traders have less than one cut fully priced in by the middle of 2026 and some market economists, including those at Commonwealth Bank, have predicted borrowers have already seen their last rate cut this cycle.
In the RBA’s updated staff forecasts, published alongside the cash rate decision, underlying inflation was expected to remain at 3.2 per cent until at least the middle of 2026 – above the bank’s 2-3 per cent target band.
That’s up from the RBA’s most recent predictions in August that the trimmed mean would ease to 2.6 per cent by the end of this year.
The Reserve Bank of Australia has held interest rates steady after a surprise surge in inflation potentially spelled the end of the cutting cycle
Ms Bullock will provide further commentary on the bank’s outlook at her post-meeting press conference later on Wednesday.
But at face value, the RBA’s forecasts preclude another cut for at least the next nine months, given it will be hard-pressed to lower interest rates with the trimmed mean above the band.
