RBA Leaves Cash Rate at 3.6% as Predicted

The number: The Reserve Bank of Australia held the cash rate at 3.6 per cent, as widely expected by the market and economists, after two inflation reports came in above market expectations and the central bank’s target range. The decision was unanimous.

Why it matters: The RBA has reduced the cash rate three times this year, but a surprise spike in inflation, combined with stronger consumer spending and economic growth, has triggered a swift repricing of rate expectations for 2026.

What has changed: The market has rapidly priced out the chance of another rate cut this cycle and is now pricing in a 55 per cent chance for a rate hike in May next year. While the market is fully priced for a move by August, they ascribe a 50 per cent chance of a follow-up move in the back half of 2026.

What’s next: RBA governor Michele Bullock will hold a media conference at 3.30pm and is widely expected to take a more hawkish tone given the strong inflation data.