The Reserve Bank of Australia held its cash rate target at 3.60 per cent at its November 2025 policy meeting, delivering a second consecutive pause after three interest rate reductions earlier in the year had progressively brought borrowing costs down from their cyclical peak. The decision was widely anticipated by market participants, who had read the RBA's prior communications as signalling a period of consolidation before any further adjustment to the policy stance.
The board noted caution regarding the new monthly consumer price index data series, which the bank said it was still evaluating as a sufficiently reliable indicator of underlying price pressures before incorporating it more heavily into its policy deliberations. The monthly CPI series provides more timely inflation readings than the quarterly measure traditionally used in Australia, but the RBA indicated it wanted a longer track record before placing full weight on the newer data.
THREE EARLIER CUTS DEFINE THE POLICY CONTEXT
The November hold follows a policy sequence in which the RBA reduced its cash rate on three separate occasions during 2025, gradually unwinding restrictive settings that had been in place to bring inflation back toward the bank's two-to-three per cent target band. Each of those cuts reflected growing confidence that inflationary momentum was dissipating, even as the domestic labour market remained comparatively resilient and household spending showed signs of recovery following the earlier tightening.
With three reductions already delivered, the board's posture shifted from active easing toward consolidation. A second successive hold reinforces the RBA's message that it is not operating on a pre-determined cutting path and will require clear and consistent evidence of ongoing disinflation before adjusting the rate further. The bank has emphasised that it prefers to wait for confirmation across multiple data points rather than acting on a single inflation print, whether favourable or otherwise.
The cumulative easing already in the pipeline continues to work through the economy with the usual transmission lags, providing incremental support to household disposable incomes and offering some relief to mortgage holders whose repayments rose sharply during the prior tightening phase. The board's judgement appears to be that this transmission is ongoing and that additional stimulus is not yet warranted.
MONTHLY CPI DATA UNDER SCRUTINY
The RBA's explicit caution about the monthly CPI indicator reflects a broader methodological concern. The series was introduced to provide more frequent inflation readings, addressing a long-standing criticism that Australia's quarterly CPI schedule left the central bank with comparatively stale data at the time of its decisions. However, the RBA noted that the monthly measure does not capture the full basket of goods and services included in the quarterly index, and that seasonal adjustment and other statistical properties of the new series are still being assessed.
If the monthly and quarterly series diverge materially in the period ahead, the RBA will face a judgement call about which to prioritise. The board's preference for confirmation across methodologies before acting introduces a degree of caution that may extend the period of steady rates beyond what a simpler, single-indicator-based approach would suggest.
The next policy meeting will allow the board to weigh incoming data on inflation, the labour market, and global financial conditions. Any shift in the cash rate will depend on whether the accumulated evidence continues to support further easing or whether unexpected developments in prices or activity alter the balance of risks that the board has been managing since the end of the tightening cycle.