FX.co ★ Australia Holds Cash Rate, Stays Cautious on Inflation

The Reserve Bank of Australia's decision at its September 2025 meeting to maintain the cash rate at 3.6% aligns with market forecasts, following a 25 basis points reduction in August. This move keeps borrowing costs at their lowest since April 2023. The board observed that both headline and trimmed mean inflation stayed within the 2–3% target range during the second quarter of 2025. However, early and volatile data hints at a potential rise in inflation for the third quarter beyond initial expectations. Additionally, there remain uncertainties concerning domestic economic activity and inflation against a backdrop of heightened global risks. While there is now more understanding regarding U.S. tariffs and the policy measures of other countries, minimizing the chances of extreme effects, ongoing trade issues are anticipated to hinder global economic growth. Furthermore, broader geopolitical threats could suppress overall demand and adversely affect domestic labor market conditions. The officials concluded that a cautious stance is warranted, committing to updating their outlook as new data is available, and remaining poised to react should global developments have a significant impact on the national economy.