Key Takeaways
- The Reserve Bank of Australia (RBA) maintained its cash rate at 3.60% in September 2025, a widely anticipated decision following three rate cuts earlier in the year.
- RBA Governor Michele Bullock reiterated the central bank's commitment to a 2.5% core inflation target within the broader 2-3% band, emphasizing that policy adjustments would be made if necessary.
- Bullock indicated that the RBA is holding off on providing forward guidance on future rate movements, preferring to await crucial November data, including the September quarter inflation figures, before making further decisions.
- Despite recent monthly CPI data showing inflation "a bit higher than expected" in August at 3.0% year-on-year, the Governor affirmed that overall inflation remains stable and the economy is in a "good spot" with a "really good news" recovery.
- The RBA's policy focus will continue to be on quarterly inflation metrics due to the inherent volatility of monthly CPI data, which nonetheless offers useful signals.
Reserve Bank of Australia (RBA) Governor Michele Bullock delivered a series of statements on September 30, 2025, following the central bank's decision to keep the cash rate steady at 3.60%. This move was largely expected by economists and markets, coming after the RBA had already implemented three rate cuts earlier in the year. Bullock's remarks highlighted the RBA's cautious, data-dependent approach amidst a recovering domestic economy and persistent global uncertainties.
Inflation and Policy Outlook
Governor Bullock reaffirmed that the RBA's core inflation goal is 2.5%, aiming to keep it sustainably within the 2-3% target range. While recent monthly Consumer Price Index (CPI) data for August showed a slight uptick to 3.0% year-on-year, Bullock noted that this was "a bit higher than expected" but that overall inflation remains stable. The RBA continues to prioritize quarterly inflation metrics over monthly figures due to the latter's volatility, though monthly data still provides useful signals for policymakers.
The Governor was noncommittal regarding the prospect of additional rate cuts, stating that the RBA "may or may not see additional rate cuts". The board is holding off on providing forward guidance, preferring to wait for the comprehensive September quarter inflation data, expected in November, along with other economic indicators, before making any further policy adjustments. This stance underscores the RBA's commitment to a flexible, data-driven monetary policy.
Economic Recovery and Global Risks
Bullock painted a broadly positive picture of the domestic economy, describing it as being in a "good spot" and calling the recovery "really good news". She noted that domestic data since the August meeting have been "broadly in line with our expectations or if anything slightly stronger," with private consumption showing signs of resilience. The RBA anticipates that private demand will increasingly drive economic growth.
However, the global economic environment remains a significant source of uncertainty. Bullock specifically highlighted the "uncertain and unpredictable" nature of global conditions and warned of potential risks stemming from a structural shift in the global trading system, including rising tariffs. While the direct impact on Australia may be limited, the knock-on effects on major trading partners could influence Australia's economic trajectory.
The labor market has remained "broadly steady" and "a little tight," with the unemployment rate at 4.2% in August, consistent with the RBA's projections. While wage growth has moderated, high unit labor costs and weak productivity growth are factors the RBA continues to monitor closely. The RBA's dual mandate focuses on achieving both price stability and full employment, and Bullock emphasized the importance of maintaining a healthy jobs market while bringing inflation down sustainably.
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.