The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 3.6% following its September board meeting, holding fire as policymakers weigh the competing forces of sticky inflation and a still-tight labour market.
The outcome was widely expected, with markets pricing only limited chances of a move ahead of today’s decision. Still, the RBA’s statement highlighted that inflation remains at the upper end of its 2–3% target band, while the economy is showing more resilience than some forecasters had anticipated.
Josh Gilbert, Market Analyst at eToro Group Ltd, said the central bank’s stance underlines its caution.
“As expected, the RBA kept the cash rate steady at 3.60% today, choosing patience over action as it waits for clearer signals on inflation,” he said.
“The recent pickup in monthly CPI to the top of the RBA’s 2–3% band, combined with a still-tight labour market, gave the board little incentive to ease further. Policymakers are clearly reluctant to move before seeing the next quarterly inflation data due ahead of November’s meeting, which will provide a far more reliable read on the trajectory of inflation.”
Gilbert added that while another cut this year is not entirely off the table, “today’s outcome highlights the RBA’s fight against inflation that is proving stickier than hoped”, with market pricing for a November reduction now trimmed back to a 38% chance from 55%.
From a business perspective, the decision prolongs cost pressures, said Ben Thompson, CEO of Employment Hero.
“It’s not the news we were hoping for, but it’s what most of us expected in the current climate. CPI has jumped for the second month in a row and is now sitting at the top of the RBA’s target band,” Thompson said.
“For business owners and workers, it’s another blow,” he added. “Prices are still high, and the cost of borrowing remains painful. Many businesses are holding back on full-time hires and instead relying on casual and contract work to manage costs.”
For markets, the pause is expected to keep pressure on rate-sensitive sectors of the ASX 200, while the Australian dollar could find support as traders pare back near-term easing bets. Attention now turns to Governor Michele Bullock’s press conference, where her tone will be scrutinised for clues on whether the November meeting could bring a step lower in rates.