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

**As seen in Risk In The Week report 09/26/25, get full access now!

The RBA decided to hold the cash rate target steady at 3.60% during its most recent Monetary Policy Board meeting. This marks a pause in the easing cycle after three consecutive 25-basis-point cuts earlier in the year (bringing the total reduction since January to 75 basis points). The decision was widely anticipated by economists, who cited ongoing assessments of inflation trends, labor market softening, and global uncertainties as reasons for caution. Underlying inflation (trimmed mean CPI) for the June quarter was 2.7%, within the RBA's 2–3% target band but slightly above forecasts. Headline inflation stood at 2.1%. The unemployment rate averaged 4.2% in the June quarter, with a slight rise to 4.3% in June, indicating a softening but stable job market. Economic growth forecasts for 2025 were downgraded to 1.7% from 2.1%, reflecting tighter conditions but no immediate recession signals. Heightened uncertainty around international demand and supply chains influenced the Board's cautious stance, emphasizing that monetary policy is positioned to respond if needed.

The team at NAB predicts the next cut could come in November 2025, potentially lowering the rate to 3.35%, though some see delays until May 2026 if inflation doesn't cool further. For September, no economist expects the RBA to move policy given economic developments since the August meeting. Westpac analysts said the RBA s unlikely to rush into rate cuts, but nor will it keep policy tighter than necessary for too long. Hence, Westpac continues to expect the RBA to remain on hold next week, with cuts to follow in November, February and May.