RBA holds cash rate at 3.60% in September – outlook for further cuts in 2025 uncertain

The Reserve Bank of Australia (RBA) left the cash rate at 3.60% during its September meeting.

Australians have seen rates cut three times in 2025: the first in mid-February, another in May and the latest in August, reflecting the central bank's measured response to easing inflation.

However, this month the Reserve Bank has had to balance mixed economic signals. Inflation – albeit the more-volatility prone monthly indicator – edged up 3.0% over the year to August, suggesting price pressures remain. At the same time, the unemployment rate held steady at 4.2% in August, pointing to a labour market that remains relatively tight.

What does this mean for borrowers?

For mortgage holders on variable rate home loans, the RBA’s decision to hold means little immediate change. There’s no relief from lower rates unless lenders choose to make reductions.

The hold signals that the RBA is in a “wait-and-see” mode, preferring to stay cautious rather than push ahead with further easing. Markets are likely to interpret this as the central bank waiting for clearer signals from upcoming economic data before making its next move.

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Why did the RBA hold?

The RBA’s decision to keep the cash rate steady in September was based on several factors:

• Inflation outcomes were a bit stickier than expected in recent months, raising caution about cutting too soon. However, it’s important to note that these readings were based on the monthly CPI indicator and not the RBA’s preferred quarterly index.
• The labour market remains relatively tight, with wage pressures still present, making the RBA wary of stimulating too much demand.
• Global uncertainties are constant and impactful. For example, supply chain pressures, external inflation, currency movements and more could be a risk buffer.
• The RBA wants to see the full quarterly CPI and other macro data before acting further.
• The Board suggests previous rate cuts are still having effects and more time is needed to assess the transmission to the broader economy.

Consumer Price Index (CPI)

The latest CPI figures provide important context for why the central bank adjusts the cash rate. The table below shows historical outcomes for quarterly inflation over the last decade.

When will the RBA cut rates again?

Following the decision to hold rates in September, borrowers are still hoping for further relief, pondering if and when the RBA will move again. Future decisions will depend on incoming economic data, particularly inflation, economic growth, wages, and employment figures.

In its statement on monetary policy , the RBA said inflation has fallen significantly since its 2022 peak but recent numbers suggest prices could be rising again. In the June quarter, both headline and underlying inflation were comfortably within the RBA’s 2-3 percent target band, yet recent monthly data hints inflation in the September quarter might be higher than expected.

Two of the Big Four banks forecast another cash rate reduction before the end of 2025.

See our Interest Rate Tracker to find out which providers pass on rate cuts – and which don’t.