RBA Holds, But Timing of the Next Cut Remains Unclear

• The RBA left the cash rate unchanged at 3.60% yesterday in a unanimous decision, citing steady labour conditions, firmer private demand, and the risk of sticky services inflation.
• While inflation is technically within the 2–3% band, the Bank flagged that the pace of disinflation has slowed, suggesting progress remains uneven.
• The statement also noted that recent, albeit partial, data imply Q3 inflation could print higher than the Bank had assumed in August.
• Forecasts now place trimmed mean inflation at 0.8% q/q and 2.7% y/y for Q3, prompting many economists to delay expectations for the first rate cut to mid-2026.
• Market pricing has adjusted accordingly, with the odds of a November cut slipping to around 30% (down from 50% pre-meeting). By mid-2026, futures now imply about 30bp of easing, compared with 35bp before the meeting and 47bp prior to last week’s CPI data.