Australia’s Interest Rate Decision for November 2025 confirmed the cash rate at 3.60%, unchanged from October 2025 and in line with market expectations. This marks the fourth consecutive month without a rate change following a series of cuts from 4.10% in February 2025. The Reserve Bank of Australia (RBA) appears to be balancing inflation control with growth concerns amid a complex global environment.

Drivers this month

• Inflation moderated to 3.10% YoY in November, down from 3.30% in October, signaling easing price pressures.
• Unemployment held steady at 3.80%, reflecting a tight labor market supporting consumer spending.
• GDP growth slowed slightly to 0.40% MoM in November from 0.50% in October, indicating cautious economic momentum.

Policy pulse

The RBA’s decision to hold rates at 3.60% aligns with its inflation target range of 2–3%. The central bank’s statement emphasized vigilance on inflation trends and external risks, suggesting a patient approach before further easing or tightening.

Market lens

In the first hour post-announcement, the AUD/USD pair edged down 0.15%, reflecting mild disappointment among traders expecting a more dovish tilt. Australian 2-year government bond yields remained stable near 3.65%, while equity markets showed limited volatility.

Core macroeconomic indicators for November 2025 reveal a mixed but generally stable picture. Inflation’s slight deceleration contrasts with steady employment and moderate GDP growth, underscoring the RBA’s cautious stance.

Inflation and Employment

Consumer Price Index (CPI) inflation slowed to 3.10% YoY in November from 3.30% in October, driven by easing energy and food prices. Core inflation, excluding volatile items, held at 3.00%, consistent with the 12-month average of 3.05%. The unemployment rate remained at a low 3.80%, unchanged from October and well below the 4.20% average over the past year.

GDP and Consumption

GDP growth moderated to 0.40% MoM in November, down from 0.50% in October and below the 0.45% 12-month average. Household consumption growth slowed to 0.30% MoM, reflecting cautious consumer behavior amid inflation concerns and rising borrowing costs.

Fiscal Policy & Government Budget

The Australian government’s fiscal stance remains mildly expansionary, with a budget deficit of 1.20% of GDP in November, slightly improved from 1.40% in October. Infrastructure spending and targeted tax relief continue to support domestic demand, offsetting some headwinds from monetary tightening.

What This Chart Tells Us

Market lens

Immediate reaction: AUD/USD declined 0.15% post-decision, reflecting tempered optimism. Australian 2-year bond yields held steady, indicating market confidence in the RBA’s patient approach. Equity markets showed muted responses, with the ASX 200 closing flat.

Looking ahead, the RBA faces a complex environment balancing inflation risks, growth prospects, and external uncertainties. The central bank’s forward guidance suggests a data-dependent approach, with three plausible scenarios:

Bullish scenario (25% probability)

• Inflation continues to ease below 3%, allowing the RBA to cut rates by 25–50 bps in early 2026 to support growth.
• Global commodity prices stabilize, reducing cost pressures on Australian producers and consumers.
• Fiscal stimulus and strong labor market sustain domestic demand.

Base scenario (55% probability)

• Inflation hovers near 3%, prompting the RBA to maintain rates at 3.60% through mid-2026.
• GDP growth remains moderate at 2.50% annualized, with steady employment.
• External risks, including geopolitical tensions, cause intermittent volatility but no major shocks.

Bearish scenario (20% probability)

• Inflation resurges above 3.50%, forcing the RBA to hike rates by 25–50 bps to contain price pressures.
• Global commodity price shocks and geopolitical risks dampen growth and investor sentiment.
• Fiscal tightening or policy missteps exacerbate economic slowdown.

Australia’s November 2025 Interest Rate Decision reflects a central bank in wait-and-see mode. The steady 3.60% rate balances easing inflation with a resilient labor market and moderate growth. External uncertainties and fiscal policy will be key to shaping the RBA’s next moves. Market participants should watch inflation trends, commodity prices, and geopolitical developments closely in the coming months.

Data sourced from the Sigmanomics database, cross-verified with official RBA releases and Australian Bureau of Statistics figures, underpin this analysis.