🏦🇦🇺Cable FX Macro Weekly Note: RBA Cash Rate Decision

**As seen in Risk In The Week report 11/01/25, get full access now!

The RBA decided to keep the cash rate target unchanged at 3.60%. This marks the third consecutive hold since the last rate cut in August 2025, reflecting the Bank's cautious approach amid persistent inflationary pressures. The RBA cited stronger-than-expected quarterly inflation data released in late October 2025, with its preferred core inflation measure (trimmed mean) rising 1.0%—well above the forecasted 0.6%. This "material miss" on inflation targets (aiming for 2-3%) prompted the Board to prioritize curbing price pressures over further easing, despite softening labor market signals and subdued household demand.

Headline CPI for the September quarter came in hotter than anticipated, reinforcing concerns that inflation remains "sticky" and not yet sustainably within the target band. GDP growth is projected at a modest 1.7% for 2025 (down from earlier 2.1% forecasts), with the labor market showing gradual cooling but still supportive of consumption.

Analysts at NAB think the RBA will remain cautious (and on hold) in November, despite the recent uptick in the unemployment rate. In trying to assess the true demand/ supply capacity of the economy in real time, the RBA will take some signal from the upside surprise in the market services components of the CPI and will require more time to gain the confidence that inflation will settle at around the middle of the target band, they added.