As expected, the Reserve Bank of Australia (RBA) decided to leave the cash rate target unchanged at 3.60% earlier today (4 November). The decision was unanimous across the 9-member board. The RBA had previously cut the cash rate by 25 bps three times this year from 4.35% at the start of the year, UOB Group's Economist Lee Sue Ann reports.

RBA holds rates at 3.60% amid inflation surprise

"Earlier today (4 November), the Reserve Bank of Australia (RBA) decided to leave the cash rate target unchanged at 3.60%. The decision was unanimous across the 9-member board. The RBA had previously cut the cash rate by 25 bps three times this year from 4.35% at the start of the year."

"The decision to hold followed a spike in inflation numbers for 3Q25. Indeed, the RBA highlighted that recent inflation data was 'materially higher' than expected and it suggested inflationary pressures may remain in the economy. The RBA forecast that underlying inflation will fall to 2.6%, around the midpoint of the target range, at the end of 2026."

"While RBA Governor Michele Bullock highlighted the RBA’s data-dependent approach, we think the RBA will resume gradual rate cuts in 1H26, on the back of a softening economy, easing inflation and a lift in the unemployment rate. For now, we are penciling two more 25 bps rate cuts by 1H26."