Cash Rate Decision
Key Takeaways
Cash Rate Unchanged: The RBA has maintained the cash rate at 3.60 per cent, in line with market expectations.
Inflation Pressures: The RBA noted that inflation has recently picked up, with headline inflation rising to 3.2 per cent over the year in the September quarter, partly due to the cessation of electricity rebates. Trimmed mean inflation was 3.0 per cent over the year.
Labour Market: The labour market remains relatively tight, though the unemployment rate rose slightly to 4.5 per cent in September from 4.3 per cent in August. Job vacancies remain high, and firms report ongoing difficulties in sourcing labour.
On the 4th of November, the Reserve Bank of Australia (RBA) held the cash rate target at 3.60 per cent, reflecting a cautious approach in the face of stronger-than-expected inflationary pressures. Domestic economic activity continues to recover, with private consumption increasing and housing market conditions improving. However, uncertainties remain regarding the persistence of demand, global growth, and broader geopolitical risks. The RBA continues to monitor the evolving economic data to guide future decisions.
What Impacted the RBA’s Decision
The RBA cited a combination of domestic and international factors. Domestically, private demand has increased, housing prices are rising, and construction costs have picked up, indicating the effect of previous rate reductions. Labour market conditions remain tight despite a slight rise in unemployment, while wage growth and productivity trends suggest continued inflationary pressure. Globally, trade policy uncertainties and other geopolitical risks continue to pose potential headwinds for economic growth.
Moving Forward
The RBA emphasised that its focus remains on achieving price stability and full employment. Financial conditions have eased since earlier in the year, but the full effects of past cash rate reductions will take time to materialise. With recent inflationary pressures exceeding expectations, the RBA remains cautious and will continue to assess both domestic and international developments before considering further adjustments. The November decision was unanimous, reflecting consensus among all Board members.
The RBA’s next monetary policy decision is scheduled for the 9th of December. The REIV will continue to monitor developments, as interest rate settings are a key factor influencing borrowing capacity, investment activity, and mortgage servicing in the Victorian real estate sector.