By Tim Findlay

RBA to Hold The Line in September

The Reserve Bank of Australia (RBA) looks set to keep its official cash rate at 3.60% when it meets later this month. This stance sets it apart from international counterparts such as the U.S. Federal Reserve and the Bank of Canada, but broadly in line with other developed economies maintaining a cautious approach.

For business borrowers hoping for further relief, the wait may continue. Market pricing and analyst surveys suggest the next move is more likely later in the year.

Global Easing

The U.S. Federal Reserve cut its benchmark federal funds rate by 25 basis points to 4.00–4.25% on 17 September, resisting pressure for deeper cuts amid persistent inflation concerns.

In Canada, the Bank of Canada reduced its overnight rate to 2.50% from 2.75%, citing slower growth and trade uncertainty from tariffs.

Elsewhere, central banks such as the Bank of England remain cautious, holding rates steady as inflation risks from global trade disruptions continue to filter through.

Why the RBA is expected to hold

1. Inflation still sticky: Headline inflation has eased into the 2–3% target band, but core inflation and wage growth remain elevated, keeping the RBA wary about declaring victory.

2. Stronger domestic activity: Recent data show consumer spending and economic activity have rebounded. With unemployment steady at 4.2%, there is a risk that easing too soon could reignite inflation.

3. Market expectations pushed out: Futures markets, including the ASX 30-Day Interbank Cash Rate Futures, now price a high probability of no move in September, with cuts pushed back to November or later.

What to watch for instead

Even if rates remain unchanged, much of the attention will shift to forward guidance:

• Inflation outlook: Any signs that inflation is falling sustainably — or not — will shape expectations for cuts in coming months.
• Employment and wage trends: Further cooling in the labour market could tilt the narrative toward eventual easing.
• Global pressure: As other major central banks cut rates, there will be increased scrutiny on the RBA’s language around exchange rates, trade, and monetary policy alignment.

Bottom line

The RBA is expected to hold rates steady, balancing its cautious stance with incoming data. But the tone of the statement will matter almost as much as the decision itself — it may offer subtle guidance on when the easing cycle might begin.