Australia: RBA likely to hold off easing for the remainder of this year – UOB Group

Australia’s consumer price index (CPI) climbed to 1.3% q/q in 3Q25, rising from the 0.7% q/q reading in 2Q25, and coming in stronger than consensus estimate of 1.1%. The latest reading marked the highest quarterly rise since Mar 2023. The main contributors to the rise were Housing (+2.5% q/q), Recreation and culture (+1.9% q/q) and Transport (+1.2% q/q), UOB Group's Economist Lee Sue Ann reports.

Australia’s inflation tops forecasts

"Australia’s consumer prices rose 3.2% y/y in 3Q25. The increase topped the 2.1% rise in 2Q25 and came in above the 3.0% forecast. The figure also pushed inflation beyond the Reserve Bank of Australia (RBA)’s 2%–3% target band for the first time since 2Q24."

"We now think the RBA is likely to hold the cash rate at 3.60% at both the upcoming 4 Nov and 9 Dec meetings. For now, the RBA is likely to wait for further information before moving its hand. Still, we think the RBA will resume gradual rate cuts in 1H26."

"The pickup in inflation seems to be transitory. Moreover, employment growth has now clearly slowed, with the rise in the unemployment rate to 4.5% in Sep. We will be looking to Oct’s data to confirm the trend."