RBA’s next interest rate move revealed by top economists

Australian borrowers are facing a nervous wait, with the Reserve Bank expected to hold interest rates steady in September before delivering another cut as a Christmas gift.

Markets and economists are increasingly betting that the central bank will slash rates again in November, taking the cash rate from its current 3.60 per cent to 3.35 per cent by the end of the year. However, this suggests that the RBA is likely to hold its cash rate steady at its September 29–30 meeting, following a 0.25 per cent rate cut in August.

Market indicators, including the ASX 30 Day Interbank Cash Rate Futures, indicate an 86 per cent probability that the RBA will maintain its current cash rate at the upcoming meeting. Economists have also ruled out back-to-back rate cuts, citing the need to evaluate the full third-quarter inflation figures, which are due in October.

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Westpac Group chief economist Luci Ellis and head of macro-forecasting Matt Hassan stated that stronger-than-expected local data has effectively ruled out a September cut, but November remains a possibility.

“Domestic data since then has been on the positive side of expectations, essentially ruling out a September move and confirming our view that the next cut in the cash rate will be in November at the earliest,” they told Australian Broker.

RBA Governor Michele Bullock addresses the media. Picture: Christian Gilles / NewsWire

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The RBA’s August rate cut, which brought the cash rate down to 3.60 per cent, marked the beginning of an easing cycle aimed at supporting economic growth. However, the economists noted that while risks are now more “two-sided,” the RBA is pursuing a cautious approach and will likely keep policy on hold until later in the year.

This comes as the RBA expects steady unemployment at 4.3 per cent through to 2027. It has also downgraded its economic growth forecast for 2025 to 1.7 per cent (from 2.1 per cent).

Major banks, including Commonwealth Bank, NAB, and ANZ, have also forecast a 25 basis point reduction in November.

“This is an RBA Board that appears comfortable with the current inflation outlook and the pace of easing,” CBA Senior Economist Belinda Allen said.

“We expect another rate cut in November to take the cash rate to 3.35 per cent as the RBA continues its gradual and cautious easing cycle.”

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Bendigo Bank chief economist David Robertson also told MPA that a September cut is unlikely.

“After the August RBA cash rate cut, we’re not expecting a back-to-back cut in September—especially after a higher read for inflation in the latest monthly indicator for July,” he said.

He added that attention is now turning to the quarterly inflation figures, due late next month, which will play a key role in determining when the RBA might next adjust the cash rate.

“The Reserve Bank wouldn’t have been surprised by the rise in CPI in the monthly numbers due to electricity rebates and other one-off factors, but core inflation was a little higher, so the RBA will want to see the full third-quarter data out on October 29 before cutting again,” he said.

What lies ahead

As the RBA navigates the complexities of inflation, economic growth, and global uncertainties, its decisions remain under intense scrutiny. For now, September appears to be a month of stability, with the central bank opting to hold steady and assess incoming data before making further moves.

The next few months will be critical in shaping Australia’s economic trajectory, with November emerging as the likely turning point for the RBA’s easing cycle. Until then, all eyes will be on inflation figures and broader economic indicators to gauge the central bank’s next steps.