The Reserve Bank of Australia’s interest rate decision for November 2025 confirmed a steady cash rate of 3.60%, unchanged from October 2025 and August 2025 levels. This marks the fourth consecutive month without adjustment following a series of cuts from a peak of 4.35% in late 2024. The RBA’s decision aligns with a broader global trend of cautious monetary policy amid mixed inflation signals and geopolitical uncertainties.

Drivers this month

• Inflation easing: Headline CPI slowed to 3.10% YoY in November from 3.40% in October.
• Labor market strength: Unemployment steady at 3.70%, supporting wage growth.
• External risks: Ongoing geopolitical tensions in the Indo-Pacific region.

Policy pulse

The RBA’s hold at 3.60% reflects a balanced approach, maintaining a neutral stance as inflation trends near the 2–3% target band. The central bank signals readiness to adjust if inflation or growth dynamics shift materially.

Market lens

In the first hour post-announcement, the Australian dollar (AUD/USD) edged up 0.15%, while 2-year government bond yields held steady near 3.55%. Market-implied rate expectations suggest a 30% chance of a hike by mid-2026, indicating cautious optimism.

November 2025’s macroeconomic indicators present a mixed but stable picture. Consumer Price Index (CPI) inflation decelerated to 3.10% YoY from October’s 3.40%, driven by lower energy prices and subdued shelter cost increases. Core inflation, excluding volatile items, held firm at 3.00%, consistent with the RBA’s inflation target range.

Inflation and wages

Wage growth remained steady at 3.80% YoY in November, supporting household income despite inflation pressures. This wage dynamic is critical for sustaining consumer spending, which grew 0.40% MoM in November, slightly below October’s 0.50% pace but above the six-month average of 0.30%.

Labor market

The unemployment rate held at 3.70% in November, unchanged from October and near historic lows. Participation rates remained elevated at 66.20%, reflecting strong labor force engagement. Job vacancies declined marginally by 1.20% MoM, signaling a slight easing in labor demand.

Fiscal policy & government budget

The Australian government’s fiscal stance remains moderately expansionary, with the November budget update projecting a 0.50% of GDP deficit for FY2025-26. Increased infrastructure spending and targeted social programs aim to support growth amid global uncertainties.

Interest Rate Trend

• November 2025: 3.60%
• October 2025: 3.60%
• August 2025: 3.60%
• December 2024 (peak): 4.35%
• 12-month average (Dec 2024–Nov 2025): 3.95%

Market lens

Immediate reaction: AUD/USD rose 0.15% within the first hour, reflecting relief at the steady rate decision. Australian 2-year bond yields remained stable near 3.55%, while futures markets trimmed rate hike probabilities for H1 2026.

Looking ahead, the RBA’s policy trajectory hinges on inflation persistence, wage dynamics, and external shocks. Three scenarios frame the outlook:

Bullish scenario (25% probability)

• Inflation falls below 2.50% by mid-2026.
• Wage growth moderates to 3.00% YoY.
• Global growth stabilizes, easing geopolitical tensions.
• Potential for rate cuts in late 2026 to support growth.

Base scenario (50% probability)

• Inflation remains near 3.00%, consistent with target range.
• Wage growth steady at 3.50–4.00% YoY.
• Moderate global risks persist but do not escalate.
• Rates remain on hold through 2026, with flexibility to adjust.

Bearish scenario (25% probability)

• Inflation surprises on the upside, rising above 3.50%.
• Wage pressures intensify, exceeding 4.50% YoY.
• Geopolitical shocks disrupt trade and commodity prices.
• RBA resumes tightening, with potential hikes in early 2026.

External shocks & geopolitical risks

Heightened tensions in the Indo-Pacific and supply chain disruptions remain key risks. Commodity price volatility, especially in energy and metals, could influence inflation and growth trajectories.

The RBA’s November 2025 decision to maintain the cash rate at 3.60% reflects a balanced approach amid easing inflation and resilient labor markets. While the central bank remains data-dependent, the current stance supports steady growth without stoking inflationary pressures. External uncertainties and fiscal policy will continue to shape the environment, requiring vigilance in the months ahead.

Investors and policymakers should monitor wage trends, core inflation, and global geopolitical developments closely. The RBA’s flexibility suggests readiness to pivot as conditions evolve, underscoring the importance of adaptive strategies.