RBA delivers fifth rate hold for 2025 as hike concerns escalate

Yasmine Raso

Senior Journalist, Financial Newswire

9 December 2025

The Reserve Bank of Australia (RBA) has delivered its final cash rate decision for 2025 with a hold at 3.6 per cent, as the latest Consumer Price Index (CPI), employment and wages data releases point to an upswing in economic conditions.

This comes after the Australian Bureau of Statistics’ (ABS’) inaugural monthly CPI data release for October confirmed inflation is now hovering well above the the central bank’s target range of two to three per cent at 3.8 per cent, after spending just seven months scarcely within range.

Awaiting today’s decision from the RBA, several industry players have already quickly moved to pull forward their expectations of a new policy tightening phase commencing as early as Q3 next year from original Q1 2027 forecasts.

“While inflation has fallen substantially since its peak in 2022, it has picked up more recently,” RBA Governor, Michele Bullock, said.

“The Board’s judgement is that some of the recent increase in underlying inflation was due to temporary factors and there is uncertainty about how much signal to take from the monthly CPI data given it is a new data series.

“Nevertheless, the data do suggest some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring.”

In delivering the unanimous decision, the RBA board’s statement confirmed they remain cautious in assessing the “persistence of inflationary pressures” and whether they remain as temporary as initially thought, despite the risks “tilting to the upside”.

“Private demand is recovering. Labour market conditions still appear a little tight but further modest easing is expected. The Board therefore judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve.

“The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.

“The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.”

The board noted in its statement that its decision to leave the official cash rate unchanged was driven by a bounceback in economic activity and the current rates of employment participation.

“Growth in private demand has strengthened, driven by both consumption and investment. Activity and prices in the housing market are also continuing to pick up. Financial conditions have eased since the beginning of the year, credit is readily available to both households and businesses and the effects of earlier interest rate reductions are yet to flow through fully to demand, prices and wages. On the other hand, money market interest rates and government bond yields have risen more recently.

“Various indicators suggest that labour market conditions remain a little tight. The unemployment rate has risen gradually over the past year and employment growth has slowed. However, measures of labour underutilisation remain at low rates, surveyed measures of capacity utilisation are above their long-run average and business surveys and liaison continue to suggest that a significant share of firms are experiencing difficulty sourcing labour.

“Wages growth, as measured by the Wage Price Index, has eased from its peak but broader measures of wages continue to show strong growth and growth in unit labour costs remains high.

“There are uncertainties about the outlook for domestic economic activity and inflation and the extent to which monetary policy remains restrictive. On the domestic side, the pick-up in momentum has been stronger than anticipated, particularly in the private sector. If this continues, it is likely to add to capacity pressures.

“Uncertainty in the global economy remains significant but so far there has been minimal impact on overall growth and trade in Australia’s major trading partners.”