A quarter can change everything
The interest rate conversation has shifted dramatically. After a steady decline in inflation from December 2022, reaching the Reserve Bank of Australia’s (RBA) target range of 2–3% by March 2025 (2.9%) and dipping further in June (2.7%), the September quarter saw inflation climb back to 3% (annualised).
Following the 4 November monetary policy meeting, RBA Governor Michele Bullock noted that inflation may remain stubborn around 3% before easing back to approximately 2.7%.
Why the change?
With 0.75% in interest rate cuts since February and low unemployment, continued spending has driven asset prices - shares and property - higher, putting upward pressure on inflation. Earlier this year, banks and the RBA suggested a neutral cash rate of around 3.1%. But after the latest CPI announcement, forecasts have shifted:
- Current cash rate: 3.6%
- CBA: No further cuts foreseeable
- Other major banks: At least one cut in 2026
What does this mean for you?
Before the CPI announcement, the outlook was for rates to keep falling. Now, the cash rate appears neutral, with potential for increases into 2026 if employment remains strong and inflation moves higher. This may bring fixed-rate options back into consideration for some businesses.
Let’s talk strategy
Every business is different. If you’re wondering how these changes impact your plans, our team is here to help. Contact us for an exploratory discussion - stay InTouch.