RBA cash rate 3.6% held steady as inflation rises but economic growth remains moderate, keeping rate cuts or hikes off the table for now

The Reserve Bank of Australia (RBA) has held the official cash rate at 3.6% in its final meeting of 2025, citing mixed signals from the economy and inflation.

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The central bank noted that while overall price pressures have eased since 2022, inflation “has picked up more recently,” with signs of a broader-based increase that may persist.

The board emphasised that rate cuts are not currently under consideration.

Economic growth, meanwhile, is strengthening.

Private demand has improved, and the housing market remains firm, although the labour market is gradually losing momentum.

The RBA described activity as recovering, but still balanced by lingering pressures on households and softer discretionary spending.

“The board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions,” the RBA said, signalling a neutral stance without bias toward future hikes or cuts.

Analysts said the statement confirms expectations for a prolonged pause.

Australia’s major banks predict rates will remain steady at least until mid-2026, with markets largely pricing in only a single potential hike by the end of next year.

The RBA highlighted uncertainty in the global economy, noting limited impact on growth or trade with Australia’s main partners.

Its cautious approach contrasts with recent US Federal Reserve moves, where modest rate cuts were made despite persistent inflation concerns.

Looking ahead, the central bank will monitor services inflation closely.

A sustained easing could reopen the door for rate cuts, while continued upward pressure might increase the risk of a hike, though this is not the bank’s central scenario.

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For now, the RBA concludes 2025 with a steady, watchful approach, prioritising stability over immediate policy change.