The Reserve Bank of Australia's Monetary Policy Board left the cash rate unchanged at 3.60% on 30 September 2025, saying the decline in underlying inflation had slowed. The decision was unanimous.
The hold followed three 25-basis-point cuts earlier in 2025, in February, May and August, which lowered the cash rate from 4.35%, the level it had reached in November 2023 at the peak of the previous tightening cycle.
INFLATION AND DEMAND
The board said inflation had fallen substantially since its 2022 peak, with both headline and trimmed mean inflation within the 2–3% target range in the June quarter. However, recent data, while partial and volatile, suggested that inflation in the September quarter may be higher than expected at the time of the August Statement on Monetary Policy.
Private demand was recovering a little more rapidly than expected and taking over from public demand as the driver of growth, the board said, with consumption picking up as real household incomes rise. The housing market was strengthening, a sign that recent rate cuts were having an effect. Labour market conditions were broadly steady and remained a little tight, with unemployment unchanged at 4.2% in August, although productivity growth had been weak and growth in unit labour costs remained high.
“With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting,” the statement said. The board added that it would take some time to see the full effects of earlier rate reductions, that it judged it appropriate to remain cautious, and that monetary policy was well placed to respond decisively to international developments if they had material implications for activity and inflation in Australia.