Reserve Bank of Australia Holds Rates at 3.60%
9 December 2025 Sydney, Australia -
The Reserve Bank of Australia (RBA) Board voted unanimously to leave the cash rate unchanged at 3.60 per cent. While inflation has dropped significantly since its peak in 2022, the Board noted a recent increase in inflationary pressures.
Inflation and Economic Activity
The RBA identified that recent data indicates a “broadly based pick-up in inflation,” noting that while some factors may be temporary, others could prove persistent. Complicating this assessment is the uncertainty regarding how much signal to derive from the monthly CPI data, which is a new data series.
Despite these inflationary concerns, economic activity is recovering, with growth in private demand strengthening across both consumption and investment. Additionally, activity and prices within the housing market are continuing to rise. Financial conditions have eased since the start of the year, with credit readily available, though the full impact of previous interest rate reductions has yet to materialize in demand, prices, and wages.
Labour Market Conditions
Indicators suggest that the labour market remains “a little tight”. Although employment growth has slowed and the unemployment rate has risen gradually over the past year, several factors point to continued pressure:
• Measures of labour underutilisation remain low.
• Capacity utilisation remains above long-run averages.
• Businesses continue to report difficulties in sourcing labour.
• While the Wage Price Index has eased, broader wage measures show strong growth and unit labour costs remain high.
Future Outlook
The Board observed that risks to inflation have “tilted to the upside” and domestic economic momentum has been stronger than anticipated, particularly in the private sector. While significant uncertainty remains regarding the global economy, it has so far had minimal impact on Australia’s major trading partners.
Moving forward, the Board intends to remain cautious, paying close attention to global financial markets, domestic demand, and inflation trends to fulfill its mandate of delivering price stability and full employment.