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The RBA has cut three times in 2025: once in February, again in May, and lastly in August.
Following each cut was a hold. If this pattern continues, we’re likely to see a hold as the last meeting in August was a 25-basis-point cut.
Helping dispel thoughts of a cut was the recent consumer price index (CPI) data from the Australian Bureau of Statistics, which revealed inflation had risen to 3 per cent in August from 2.8 per cent in July.
This places inflation at the top end of the RBA’s coveted 2–3 per cent target band. Despite this, trimmed mean inflation dropped from 2.7 per cent in July to 2.6 per cent in August.
Each of the major banks has come forward and offered predictions for the September cash rate decision and provided some insight into what we can see at the tail end of 2025 and beyond.
CBA
Australia’s largest bank recently published the thoughts of its economists, Harry Ottley and Trent Saunders.
CBA is still firm that September will be a hold. Off the back of the CPI data, it now said a November cut is “not a done deal”.
Still, the major bank is predicting a cut of 25 bps to bring the cash rate target to 3.35 per cent.
ANZ
ANZ agrees that the cash rate target will remain unchanged at 3.60 per cent at the September meeting.
According to the bank’s economists, Adelaide Timbrell and Adam Boyton, geopolitical uncertainty can have an influence on inflation, which could keep the RBA cautious at its upcoming meeting.
The pair believe there will be a cut in November, which will keep the cash rate at 3.35 per cent for an extended period.
NAB
NAB has gone a step further than the other banks and believes there will be a hold at every meeting until May 2026.
There are still plenty of monetary policy meetings between now and then – September, November, December, February, and March.
This is due to CPI figures, which the bank’s economists believe will usher in “restrictive policy”.
“We suspect it will take at least two, if not three, quarterly inflation prints to resolve the extent of signal in the Q3 inflation data,” said NAB.
Westpac
The last of the major banks, Westpac, shared similar thoughts to CBA. Chief economist Luci Ellis believes the RBA will hold in September, and the case for a November cut is “not fully certain.”
Despite this, Westpac is standing by its prediction of a November cut. According to Ellis, labour market positivity is providing an important counterweight to inflation concerns. The major is also anticipating further 25-bp cuts in February and May.
Despite the unanimous opinion that the RBA will hold in September, it’s important to note that expectations were subverted at the July meeting.
Each of the majors, as well as just about every other economist, penned a cut. The industry was shocked when the central bank held. The message: don’t count your chickens.
[Related: Don’t count your chickens: August rate cut far from a ‘shoo-in’]
