The Reserve Bank of Australia (RBA) has decided to keep the cash rate unchanged at 3.6% at its last meeting of the year today.
It’s the fourth time in a row the RBA has left the rate unchanged, after a series of cuts to bring it down from a 12-year high of 4.35% going into this year.
It comes as the latest inflation data showed prices are rising at the fastest pace in two years.
RBA
The RBA is Australia’s central bank. It meets eight times a year to discuss how to achieve its two main goals: keeping inflation within a target band of 2-3%, and ensuring everyone who wants a job can find one.
Its main tool to achieve these goals is to adjust the cash rate (what it charges for short-term loans) to grow or slow down the economy.
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If inflation is too high (as it was immediately after the pandemic) it raises the cash rate to cool down the economy. Or, if growth is sluggish, it can lower that rate to encourage spending.
Decision
In a statement announcing the decision, the RBA board said the increase in inflation could be “persistent,” and needed to be monitored carefully.
In light of this, it decided unanimously to hold the rate at 3.60%, finding it was “appropriate to remain cautious.”
Currently, Westpac is the only one of the ‘Big Four’ Australian banks to expect a rate cut in the first half of 2026.
ANZ, CommBank, and NAB predict the RBA will hold.
