RBA opted for a hawkish hold, citing signs of price stickiness and omitting references to further cuts. Bullock did not rule out further policy easing if core CPI sustainably settles within the 2-3% target range. There's going to be a final 25bps cut in Q4, but acknowledge the risk of the RBA deferring a cut to H1-2026, Standard Chartered's economist Nicholas Chia reports.

Steady as she goes

"The Reserve Bank of Australia (RBA) kept rates unchanged at 3.60% in a unanimous decision, as we and the market had expected. We view the rate decision as a hawkish hold. Previous references to further policy easing have been omitted in the policy statement. The RBA expressed caution over the slowing rate of disinflation after the upside surprise in August CPI, and noted that Q3 quarterly inflation may come in higher relative to its forecast (2.6% y/y). The optics of further RBA easing are complicated by a salient economic upswing as real wage growth firms up and asset price appreciation induces consumption via the wealth effect."

"At the press conference, Governor Michele Bullock did not rule out further rate reductions, but stressed the importance of data dependence on a meeting-by-meeting basis. Bullock suggested that the central bank could still lower rates amid an economic recovery, so long as the aggregate supply-demand imbalance shrinks further. Quarterly trimmed mean CPI remains the key benchmark for the RBA to assess whether price pressures (Q2: 2.7% y/y) are breaking out of the mid-point of the 2-3% target range."

"We continue to expect a final 25bps rate cut by the RBA in Q4 to round off the easing cycle, bringing terminal rates to 3.35%. The balance of risk is skewed towards the RBA deferring further cuts to H1-2026, or remaining on hold indefinitely. The market has priced out RBA rate cuts for Q4-2025 (c.14bps priced in) and 2026. We reiterate that the Q3 quarterly CPI print, which is due for release on 29 October, will serve as a key input to future cash rat"