The RBA left its cash rate unchanged at 3.60% in a unanimous decision, in line with expectations. The move reflects the Board’s preference to pause while monitoring whether recent economic surprises point to a more persistent inflation challenge.
According to the RBA, recent partial data suggest that September-quarter inflation may come in above projections made in August. At the same time, labor market indicators show conditions have been steady and remain “a little tight”, reinforcing the risk that price pressures may not ease as quickly as anticipated.
The Bank outlined two contrasting scenarios for household demand. Stronger consumption may reflect rising real incomes and wealth, potentially allowing firms to raise prices more easily and encouraging further hiring. Alternatively, this consumption rebound may not last if households turn more cautious amid uncertainty around overseas developments.
