The Reserve Bank of Australia held its cash rate at 3.60% at its September 2025 meeting, maintaining a steady policy stance as the board continued to assess the trajectory of domestic inflation and the resilience of the broader economy. The decision was widely anticipated, with most economists and market participants expecting the rate to remain on hold for the remainder of the year as the RBA allowed the cumulative impact of its tightening cycle to continue working through household finances and business credit conditions.
Easing inflation was cited as a factor supporting the case for holding. The board acknowledged the ongoing moderation in consumer price growth while signalling that it needed to see continued evidence of disinflation before it would consider adjusting the cash rate in either direction. The RBA's measured language reinforced a patient approach in an environment where both domestic and global conditions continue to evolve.
INFLATION TRAJECTORY AND THE BOARD'S ASSESSMENT
Australia's inflation profile has shifted considerably since the RBA's aggressive tightening cycle, which lifted the cash rate from historically low settings to the current 3.60% over the course of 2022 to 2024. Data available to the board ahead of the September meeting pointed to continued softening in consumer price pressures overall, though services inflation has proven more persistent than goods price inflation — a pattern observed across a range of comparable advanced economies in the current cycle.
The RBA has consistently framed its inflation target — a range of two to three per cent on the Consumer Price Index — as one that must be reached sustainably rather than temporarily. This orientation has kept the board cautious about moving to cut rates prematurely, even as headline inflation has retreated from its peak. The prevailing judgement appears to be that the 3.60% setting remains appropriate given the balance of risks, and that patience now reduces the probability of needing to reverse course later.
Economists surveyed ahead of the meeting broadly expected the hold to persist through the final quarter of 2025. Any scenario in which earlier easing became viable would likely require a combination of further improvement in inflation data and a meaningful deterioration in labour market conditions, neither of which had yet fully materialised.
HOUSEHOLD PRESSURES AND THE GLOBAL BACKDROP
Market participants and analysts have noted that the RRR retains meaningful capacity for further reduction relative to historical levels, meaning the instrument remains firmly available to the PBoC if incoming economic data deteriorates beyond current official projections. The bank has signalled its readiness to act as conditions require, and the September cut, while substantial on its own, is unlikely to represent the final adjustment the PBoC makes before the year is out should trade and domestic growth dynamics continue to fall short of targets.
Internationally, the Federal Reserve's September rate cut and the broader shift in global monetary policy towards easing provide an evolving context, though the RBA has a well-established practice of calibrating its decisions to Australian conditions. The board will continue to monitor global developments for any spillover effects on domestic financial conditions, import prices, or the exchange rate that might bear on the inflation outlook in the months ahead.