Introduction to the Reserve Bank of Australia’s Next Move
The Reserve Bank of Australia (RBA) is set to hold its next meeting on September 30, 2025, to decide whether to change the cash rate, which is currently at 3.60%. With three rate cuts earlier this year, many economists expect the central bank to pause again this month as it considers inflation, jobs, and growth.
The Current State of the Economy
The economy is slowing down, and inflation is easing but still within the RBA’s target band. The latest CPI data shows that inflation has risen to an annual rate of 3.0% in August, which is the highest level since July 2024. This suggests that the central bank will want to see consistent evidence that price growth is sustained before making another move.
Inflation: Easing but Not Out of the Woods
Headline inflation lifted slightly to 2.8% in July, mainly due to the winding back of electricity rebates, while the RBA’s preferred "trimmed mean" measure sits at 2.7%. RBA Governor Michele Bullock noted that the bank has made real progress in bringing inflation down, but its job is to ensure it stays within the target range in a sustainable way. The higher price level has affected everyone, whether it’s paying a mortgage, renting, running a business, or just trying to make ends meet.
Labour Market: Cooling but Still Tight
Unemployment has edged up to 4.2% in August 2025, suggesting the jobs market is softening. Full-time roles have fallen slightly, partly offset by an increase in part-time positions, highlighting a shift in the type of work available. The RBA noted that forecasts remain uncertain, with global conditions being unpredictable, domestic growth potentially slowing or surging, and the labour market staying tighter than expected.
Growth Outlook: Weaker Than Expected
Australia’s economy is slowing, with Commonwealth Bank tipping GDP growth of just 1.7% for 2025, down from earlier forecasts of around 2.1%. Household spending remains modest, reflecting the squeeze from higher borrowing costs and ever-rising living expenses. The RBA’s August 2025 Statement on Monetary Policy noted that higher interest rates have slowed demand across the economy and revised down GDP forecasts, expecting growth to stay below trend for some time.
RBA Language: Caution Prevails
The RBA cut the cash rate last meeting to give the slowing economy a boost, keep inflation on track, and ensure the jobs market softens without tipping into trouble. In her most recent comments, Michele Bullock said that domestic data have been broadly in line with expectations, but the economic outlook continues to be clouded by uncertainty. A growing concern for the RBA is that the global economy remains highly uncertain, and the Bank is mindful that productivity growth has not picked up and growth in unit labour costs remains high.
What the Big Four Banks Are Predicting
Commonwealth Bank (CBA)
CBA expects the RBA to hold steady in September and deliver the next cut in November, bringing the cash rate down to around 3.35% by the end of 2025. CBA economist Harry Ottley described the latest jobs numbers as a "mixed bag," but said the unemployment rate was "broadly tracking as the RBA had expected."
National Australia Bank (NAB)
NAB also expects no move in September, and while they agree another cut is coming, they don’t see urgency. NAB economists noted that "the flow of data so far does not suggest any urgency to lower rates."
Westpac
Westpac’s economists also expect the RBA to hold the cash rate in September with a potential move in November, suggesting that the central bank won’t be swayed by one month of stronger-than-expected figures.
ANZ
ANZ is also in the "hold in September, cut in November" camp. Aaron Luuk, ANZ economist, explained: "The data would not sway the market one way or another on the November RBA meeting, where a rate cut is expected, or for that matter the coming September meeting, which should pass with no change in rates."
Conclusion
It’s general consensus that the RBA is likely to sit tight in September and reassess in November, when the next round of inflation and jobs data will be on the table. The economy is slowing, and inflation is easing, but the central bank will want to see consistent evidence that price growth is sustained before making another move. With the Big Four banks predicting a hold in September and a potential cut in November, it’s clear that the RBA’s next move will be closely watched by economists and analysts alike.
