RBA reveals unanimous September cash rate decision

Further to three consecutive rises and two rate holds this year, the Reserve Bank of Australia has raised the cash rate to 4.6 per cent in September.

As has been forecast by the major banks and industry experts, the RBA has today (29 September) confirmed another cash rate rise by 25 basis points.

It follows a hold at 4.35 per cent in both June and August, which, according to the RBA, was to ensure growth in aggregate demand remained subdued to reduce capacity pressures and attempt to bring inflation back within its target range of 2 to 3 per cent.

In a statement, the RBA board said: “Inflation remains elevated and some of the upside risks flagged in August are materialising. The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts. AI-related demand is driving rapid growth in global prices for technology-related goods. And there remains pressure on domestic capacity. Liaison indicates that firms are experiencing cost pressures and are either increasing the prices of their goods and services or looking to do so. Short-term measures of inflation expectations remain elevated. And recent inflation outcomes in Australia were stronger than expected at the previous meeting.

“Growth in output has slowed but, at the margin, was stronger than expected in the June quarter. There are signs that growth in consumer spending is easing gradually as expected, although housing prices have fallen in most capital cities and new housing loans have declined noticeably. Labour market conditions have eased broadly as expected in recent months, and labour market leading indicators are broadly stable. Meanwhile, growth in business investment and debt is strong.

“There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation. The Middle East conflict remains unresolved, and there are scenarios where inflation is higher and activity lower than forecast. Global oil supply disruptions are maintaining upward pressure on global and domestic energy prices and inflation. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia. To date, however, growth in Australia’s major trading partners has been stronger than expected, as the boost from AI-related investment has outweighed the adverse effects of the Middle East conflict. In Australia, weak productivity growth continues to constrain potential growth and there are uncertainties about the economic effects of the downturn in the housing market.”

The announcement comes days after RBA governor Michele Bullock said a rise in unemployment will likely also be needed to cool the labour market and by extension, demand.

As reported, the ABS recently announced that unemployment has hit a five-year high of 4.6 per cent.

The decision has now raised the cash rate by 1 percentage point since the start of the year, beginning 2026 at 3.6 per cent.

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