At its December meeting, the RBA left rates unchanged and ruled out a cut. While not signalling an imminent hike, the Board acknowledged that if inflation proves persistent and the labour market remains strong, a rate increase could be considered in the first half of 2026. For now, rates are likely to stay on hold — provided inflation eases back into the target band as temporary factors wash out.
Mixed news on the economy and an uptick in inflation has seen the RBA move to a neutral bias for interest rates. This means that the medium turn outlook has switched from expectations for lower interest rates to one now steady interest rate settings are expected into 2026.
At the same time, the housing market is recovering. New dwelling building approvals have rebounded strongly although the level of activity remains below the rate needed to address the housing shortage.
October brought mixed signals for Australia’s economy — and a growing dilemma for the Reserve Bank.
The RBA held rates steady at its latest meeting, citing elevated inflation and a rising unemployment rate. With its dual mandate to support full employment and keep inflation near 2.5%, the central bank faces a tough choice: cut rates to support jobs, or hike to contain prices.
The unemployment rate spiked to a four year high of 4.5 per cent in September, up from 3.4 per cent at the low of the cycle and is now above the RBA’s forecast made in August for a peak of 4.3 per cent. The result rekindled expectations for further interest rate cuts, as soon as its next meeting on 4 November.
Recall that under the revised mandate of the RBA, maintaining full employment sits along side the inflation target as a fundamental objective of the Bank. The key data ahead of the next RBA meeting is the September quarter inflation data which is scheduled for 29 October.
After several months of encouraging data, the latest figures have brought a dose of reality: Australia’s economic momentum has slowed. Household spending has softened, building approvals have slipped, and sentiment has weakened — prompting renewed speculation that the RBA may deliver another rate cut before the end of the year.
The RBA appears content to leave policy on hold for the foreseeable future. With inflation under control and the economy showing cautious improvement, aggressive rate cuts are unlikely in the remainder of 2025. Any shift in policy is more likely to be down than up — but timing will depend on how consumer demand and the labour market evolve.
Growing evidence of a recovery in GDP growth, including household spending, has seen the futures market pare back pricing for future interest rate cuts. In effect, one 25 basis point interest rate cut has been ‘taken out’ of market pricing in the past month to the point where just two further cuts are priced between now and the middle of 2026.
There is a growing list of economic indicators pointing to stronger growth in consumer spending and sentiment, dwelling construction, business confidence and exports. These more favourable trends have been positively influenced by falling inflation and solid wages growth.
The Reserve Bank of Australia has delivered its third interest rate cut of 2025, trimming the cash rate by another 25 basis points. Since the start of the year, cumulative rate reductions have begun to pack more of a punch — and the RBA hopes this momentum will help bolster economic growth and prevent unemployment from climbing too far.
Confirmation of on-target inflation and further evidence of a sluggish pace of economic growth was not enough for the RBA to lower interest rates at its 8 July meeting. It surprised economists and the market, leaving official interest rates at 3.85 per cent, just 50 basis points down from the peak. A 25 basis point cut was expected and priced into markets.
At its December meeting, the RBA left rates unchanged and ruled out a cut. While not signalling an imminent hike, the Board acknowledged that if
Mixed news on the economy and an uptick in inflation has seen the RBA move to a neutral bias for interest rates. This means that
October brought mixed signals for Australia’s economy — and a growing dilemma for the Reserve Bank.
The RBA held rates steady at its latest
The unemployment rate spiked to a four year high of 4.5 per cent in September, up from 3.4 per cent at the low of the
After several months of encouraging data, the latest figures have brought a dose of reality: Australia’s economic momentum has slowed. Household spending has softened, building
The RBA appears content to leave policy on hold for the foreseeable future. With inflation under control and the economy showing cautious improvement, aggressive rate
Growing evidence of a recovery in GDP growth, including household spending, has seen the futures market pare back pricing for future interest rate cuts. In
There is a growing list of economic indicators pointing to stronger growth in consumer spending and sentiment, dwelling construction, business confidence and exports. These more
The Reserve Bank of Australia has delivered its third interest rate cut of 2025, trimming the cash rate by another 25 basis points. Since the
Confirmation of on-target inflation and further evidence of a sluggish pace of economic growth was not enough for the RBA to lower interest rates at
We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.
Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust
All portfolio numbers quoted correct as at 1 October 2025.
*Average investor return across the active portfolio as at 1 October 2025.
**Target return is after expenses and any applicable management fees for the year ended 30 June 2026. OCR = Australian Reserve Bank Official Cash Rate.
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