Reserve Bank makes final rate call for 2025

The Reserve Bank has been widely expected to keep the cash rate on hold ahead of Christmas. Find out here if the cash rate has indeed been kept at its current level.

At its November meeting, the board of the Reserve Bank of Australia held the cash rate at 3.6 per cent. Today, it has left the cash rate unchanged.

In a statement, the board said that while inflation has fallen substantially since its peak in 2022, it has picked up more recently.

“The board’s judgement is that some of the recent increase in underlying inflation was due to temporary factors, and there is uncertainty about how much signal to take from the monthly CPI data, given it is a new data series. Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring,” it said.

“Economic activity continues to recover. Growth in private demand has strengthened, driven by both consumption and investment. Activity and prices in the housing market are also continuing to pick up. Financial conditions have eased since the beginning of the year, credit is readily available to both households and businesses, and the effects of earlier interest rate reductions are yet to flow through fully to demand, prices and wages. On the other hand, money market interest rates and government bond yields have risen more recently.

“Various indicators suggest that labour market conditions remain a little tight. The unemployment rate has risen gradually over the past year, and employment growth has slowed. However, measures of labour underutilisation remain at low rates, surveyed measures of capacity utilisation are above their long-run average and business surveys and liaison continue to suggest that a significant share of firms are experiencing difficulty sourcing labour. Wages growth, as measured by the Wage Price Index, has eased from its peak, but broader measures of wages continue to show strong growth and growth in unit labour costs remains high.”