RBA Warns Persistent Inflation Could Delay Rate Cuts, May Weigh on Australian Dollar

• RBA delayed easing risk: Higher services and housing inflation may force the Reserve Bank of Australia to pause rate cuts.

• Next major data: Australian CPI for July–September due Oct. 29 will be pivotal for policy direction.

• Economic context: Tight labour market, resilient household spending, and lower productivity growth complicate easing plans (RBA, Citi conference).

RBA delay rate cuts: Persistent inflation may push back Reserve Bank of Australia rate cuts—read COINOTAG’s data-driven update and the key Oct. 29 CPI test.

By COINOTAG | Published: 2025-10-15 | Updated: 2025-10-15

How could persistent inflation delay RBA rate cuts?

RBA delay rate cuts is now a material risk because recent monthly price readings for July and August showed upside surprises, with services and housing costs remaining elevated. The Reserve Bank of Australia (RBA) has signalled a data-dependent approach, meaning the October 29 quarterly CPI will determine the timing and scope of any future easing.

What does the RBA’s inflation outlook mean for rate decisions?

At the Citi Australia & New Zealand Investment Conference in Sydney, Assistant Governor Sarah Hunter emphasised that inflation for July–September looks stronger than expected and that staff are revising forecasts ahead of the November Monetary Policy Statement. The RBA has cut the cash rate three times this year to 3.6% but held at the most recent meeting while awaiting clearer data. Hunter noted the bank targets average inflation around the 2.5% midpoint of the 2–3% band, yet persistent services and labour-intensive price pressures make a timely return to target uncertain.

Why recent data complicate easing plans

Monthly inflation surprises for July and August point to ongoing price pressures in services and housing. Labour market indicators remain tight — unemployment is near 4% — and household spending has shown resilience, supported by stronger jobs and a housing rebound. These trends reduce the RBA’s confidence that easing will not rekindle inflation, prompting a cautious stance. The RBA also revised down medium-term productivity assumptions to ~0.7% trend growth, lowering potential GDP and tightening the space for stimulatory policy without fuelling inflation.

Frequently Asked Questions

When will the RBA cut interest rates again?

The RBA’s decision is data-dependent. The next decisive input is the quarterly CPI for July–September on Oct. 29; if inflation remains above the bank’s underlying path, cuts are likely to be delayed. Any timeline beyond that depends on subsequent labour, services inflation, and spending trends. (Sources: Reserve Bank of Australia, Australian Bureau of Statistics)

Will the RBA cut rates at the November meeting?

It is uncertain. The RBA has signalled it will base decisions on incoming data; markets are split. Some expect a cut, but upside inflation surprises and a tight labour market make a November move less certain. The bank’s November Monetary Policy Statement will reveal updated forecasts and the board’s view.

Key Takeaways

• Data-dependent policy: The RBA will wait for the July–September CPI (Oct. 29) and other indicators before moving on rates.
• Inflation risks: Services and housing inflation continue to run hot, driven by wages and demand in labour-intensive sectors.
• Market implications: Traders have pushed back aggressive easing expectations; policymakers cite lower productivity growth as a constraint on cutting rates quickly.

Conclusion

The prospect that the RBA delay rate cuts has risen after stronger-than-expected monthly inflation readings and resilient domestic demand. Assistant Governor Sarah Hunter’s remarks at the Citi Australia & New Zealand Investment Conference underline a cautious, data-driven approach ahead of the Oct. 29 CPI release and the November Monetary Policy Statement. Investors and households should monitor labour market indicators, services inflation, and the upcoming CPI print for the clearest signal on the timing of easing. COINOTAG will continue to track official RBA guidance and Australian Bureau of Statistics releases for updates.

Sources: Reserve Bank of Australia public remarks (Sarah Hunter), Citi Australia & New Zealand Investment Conference, Australian Bureau of Statistics (quarterly CPI) — all referenced as plain text per editorial guidelines.