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The market is almost unanimously predicting the Reserve Bank of Australia (RBA) to keep official interest rates on hold later today (4 November) after inflation data came in higher than expected last week.
Underlying annual inflation accelerated to 3.0 per cent for the September quarter, reaching the upper edge of the central bank’s 2–3 per cent target band.
The data caused several banks to change their cash rate forecasts for the coming months, including the Commonwealth Bank of Australia (CBA) and Westpac.
CBA is now suggesting that it is the end of the rate-easing cycle, having previously predicted February 2026 as the next and final rate cut of this cycle.
The major still expects the Reserve Bank of Australia (RBA) Monetary Policy Board to leave the cash rate on hold at 3.60 per cent this week, but said the “material upside surprise” to underlying inflation meant it now expects the RBA to hold rates for a “prolonged period”.
Westpac, previously the only major to not rule out a November rate cut, has also updated its cash rate outlook.
On Monday, the bank’s senior economist, Pat Bustamante, said that while no one is expecting a cut, there could be “more hawkish than expected comments” to come from the RBA governor or surprises in the RBA’s updated forecast (i.e. upgrades to core inflation).
In response to the inflation read, Bendigo Bank also revised its forecasts, now predicting one more RBA rate cut in February 2026.
Bendigo Bank chief economist David Robertson said the unexpected jump in core inflation “makes it very difficult for the RBA to cut rates any further this year – despite the recent uptick in unemployment”.
He added: “A cup day cut is now at best around a 1 in 12 chance, having been an odds-on favourite a few days ago.”
Both Australia and New Zealand Banking Group (ANZ) and National Australia Bank (NAB) are also forecasting a rate hold later today.
NAB’s economics team said: “We expect caution to leave the RBA on an extended pause, and little guidance about the path ahead as they gather more inflation about labour market and inflation dynamics.”
ANZ expects the RBA to hold rates later today.
On Monday, chief economist Richard Yetsenga noted inflation printed above expectations and the RBA’s own forecast, “solidifying the likelihood of a hold decision”. The bank expects “one final 25bp cut in February 2026, though risks are skewed toward a later move”.
Meanwhile, Simon Bednar, the CEO of major aggregator Finsure, said a blowout in the latest inflation data meant the RBA keeping rates on hold “looks like the safest bet” on Melbourne Cup Day.
“The likelihood of an RBA cut has diminished given recent economic data,” Bednar said.
“Quarterly inflation figures came in higher than expected and while the unemployment rate has risen, there is still concern over the reigniting of the housing market.
“This is further supported by the major banks who collectively expect the RBA to keep the cash rate on hold.”
[Related: Major bank says rate-easing cycle is over]
