RBA interest rates: November minutes show Michele Bullock in no rush to cut

Homeowners should brace for interest rates to stay on hold for many months as the Reserve Bank warns price pressure may be worse than previously thought.

Minutes from the central bank’s November meeting released on Tuesday gave another strong signal the RBA won’t rush another cut.

The RBA kept the cash rate steady at 3.6 per cent on Melbourne Cup Day after core inflation — which removes volatility — hit the top of the target band at 3 per cent for the year to September.

That unanimous decision was vindicated days later when strong jobs data showed Australia’s unemployment rate had fallen back to 4.3 per cent after a brief bump.

A fresh economic forecast buried within the minutes will pour cold water on borrowers wanting additional relief in 2026.

The projection showed inflation would settle close to the middle of the target zone only with “no further change in interest rates”.

That implies the RBA will need to keep rates on hold through next year — pending any surprises — in order to hit the inflation goal.

Home building costs and services prices remain top worries for Governor Michele Bullock’s board despite hopes that September’s inflation bounce will prove largely temporary.

“There could be a little more underlying inflationary pressure than previously assessed,” the minutes said.

A range of alternative data tracking prices — aside from the consumer price index released by the Australian Bureau of Statistics — had “been signalling higher inflation”.

There were also signs of cost pressure for firms beyond wage data.

Financial markets have in recent days pared back bets on a rate cut next year and Commonwealth Bank’s Belinda Allen said the minutes “reinforced” the view that the cash rate will stay on hold.

“We generally see the speed limit of the Australian economy being reached in coming quarters and inflation pressures persisting,” she said.

“We don’t expect any major shift in tone from the RBA this year.”

But any further nasty surprises on inflation and improving economic momentum might lead the board to consider moving rates higher again, she said.

“We expect the key focus of the board from here though will be on the inflation front,” Ms Allen said.

“We agree with the view that most of the upside surprise in inflation was driven by temporary factors — although signs of persistent inflation have also lifted.”

Yet ANZ remains optimistic of a February cut and pointed to evidence that price pressure would not be permanent.

The jobs market would be a key determining factor, ANZ said.

There was also good news from the RBA about an ongoing economic recovery.

Real incomes are growing after inflation was brought under control and thanks to the Stage 3 tax cuts.

The central bank reckons the impact of the three rate cuts so far in 2025 will be felt more strongly through the economy before the year is over.