Key Takeaways
- The Reserve Bank of Australia (RBA) held its cash rate steady at 3.60%, maintaining a cautious stance as annual core inflation reached 3.0%, the top end of its target band. RBA Governor Michele Bullock emphasized that inflation over 3% is "not ideal" and "just below 3% is not good enough".
- Japanese Prime Minister Sanae Takaichi announced a significant economic stimulus package, expected to exceed 13.9 trillion yen (over $92 billion), aimed at boosting household income and combating inflation. She stressed the need for the Bank of Japan (BOJ) to collaborate with the government to sustainably achieve the 2% price target, driven by wage gains.
- While Australia grapples with persistent inflation at the upper limit of its target, Japan's inflation is still considered "halfway through" achieving the BOJ's sustained 2% target, with core inflation just under 3% in September but food prices rising over 7%.
- PM Takaichi's "Sanaenomics" seeks to adapt the legacy of Abenomics, acknowledging its success in job creation and GDP growth but noting its insufficiency in boosting private investment. Her new approach prioritizes expansionary fiscal policy and targeted investments.
Australia's Central Bank Maintains Cautious Stance Amidst Inflation Concerns
The Reserve Bank of Australia (RBA) opted to keep its cash rate unchanged at 3.60% during its November 2025 meeting, a decision widely anticipated by markets. This marks the second consecutive meeting where the central bank has held rates steady, signaling a cautious approach to monetary policy.
RBA Governor Michele Bullock highlighted the board's concerns over persistent inflationary pressures. She stated that annual core inflation exceeding 3% is "not ideal" and reiterated that "just below 3% is not good enough" for the board. Recent data showed trimmed mean inflation, the RBA's preferred measure, rose by 1.0% in the September quarter, bringing the annual rate to 3.0%—the top end of the RBA's 2-3% target band. Headline inflation also saw a jump to 3.2%.
The RBA board reviewed its policy outlook, maintaining a cautious stance due to these higher-than-expected inflation figures and ongoing uncertainties in both domestic and global economic conditions. Bullock indicated that while further rate decisions are possible, they are not certain, and the board did not even consider cutting rates at this meeting. The central bank anticipates underlying inflation will remain above 3% in the near term before gradually moderating to around 2.6% by 2027. Despite the cautious outlook, the labor market remains "a little tight," with unemployment at 4.5% in September, slightly above RBA forecasts.
Japan's PM Takaichi Unveils Fiscal Stimulus and BOJ Collaboration to Tackle Inflation
In Japan, Prime Minister Sanae Takaichi is pushing for a robust fiscal response to combat inflation and boost economic growth. She anticipates that the Bank of Japan (BOJ) will implement policies to sustainably achieve its 2% inflation target, emphasizing close collaboration with the government. Takaichi expressed a desire for inflation to be driven by sustainable wage gains rather than merely cost-push factors.
Japan is currently "halfway through" achieving a sustained 2% price target, with core inflation (excluding fresh food) registering just under 3% in September. However, food prices alone have seen a significant increase of over 7%. To address these challenges, Takaichi has announced plans for targeted government spending to enhance household income and consumer sentiment. This includes a substantial economic stimulus package, expected to exceed 13.9 trillion yen (over $92 billion). Key measures include abolishing provisional gasoline and diesel taxes, subsidizing winter electricity and gasoline bills, and raising the minimum taxable income level.
Takaichi also reflected on the legacy of Abenomics, acknowledging its success in creating jobs and boosting GDP. However, she noted that its "third arrow" of structural reforms was insufficient to stimulate private investment, partly due to corporate pessimism and the challenges of an aging society. Her economic vision, dubbed "Sanaenomics," aims to adapt Abenomics to current realities by focusing more on expansionary fiscal policy and large-scale, strategic investments. Additionally, Takaichi pledged to accelerate defense spending, aiming to reach 2% of GDP by March 2026, two years ahead of schedule.
Geopolitical Update: Russian Air Defense Claims Downing of Ukrainian Drones
In a separate development, Russian air defense units reportedly downed 85 Ukrainian drones during overnight operations, according to RIA news agency. This report comes amidst ongoing military activities in the region.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.