Central Bank Signals Readiness for Future Rate Adjustments
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In its final policy meeting of 2025, the Reserve Bank of Australia (RBA) decided to keep the official cash rate unchanged at 3.6%.
However, the central bank signaled potential future rate hikes if inflationary pressures continue.
Governor Michele Bullock emphasized that while no immediate rate increase was discussed, the possibility remains if inflation persists. This stance led to a strengthening of the Australian dollar and an uptick in bond yields, with markets anticipating a possible rate hike as early as February 2026.
Recent data shows inflation rising for four consecutive months, reaching 3.8% in October, with core inflation at 3.3%, exceeding the RBA's target band. Despite uncertainties surrounding the new monthly CPI data, signs of more persistent inflation have emerged.
Economic indicators such as robust growth, a resilient labor market, rising home prices, and consumer optimism suggest less restrictive financial conditions. The RBA is closely monitoring upcoming inflation data, which could influence its next monetary policy decisions.
For borrowers and investors, this development underscores the importance of staying informed about potential interest rate changes and their implications for financial planning and investment strategies.
Published:Tuesday, 16th Dec 2025 Source: Paige Estritori
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