ANZ expects the RBA to stay data-driven and hold the cash rate at 3.60% longer, constrained by ongoing inflation and demand signals.

The labor market remains balanced, with unemployment around 4.3% in October, supporting the view that a 2026 rate hike is unlikely.

Inflation drivers include housing price gains and the removal of state electricity rebates, shaping expectations for the RBA's policy path.

Some forecasters, such as Westpac, still foresee rate reductions in 2026, with cuts possible in May and August if inflation eases.

October CPI rose to 3.8% (trimmed mean 3.3%), reducing the likelihood of near-term easing and signaling the RBA’s easing cycle may be over for now.

Global markets showed mixed signals while Australian shares and futures fluctuated, ending the week with modest gains or stability.

ANZ notes conflicting mandates—price stability and full employment—that reduce the odds of further easing amid inflation pressures and near-potential growth.

HSBC also expects a hold through 2026, with potential increases unlikely before 2027 due to capacity constraints, tight core inflation, and housing dynamics.

The RBA’s stance remains data-driven, aiming to steer inflation toward the 2–3% target while unemployment stays around its current level.

Analysts anticipate a more hawkish tone in the RBA’s communications, citing persistent inflation pressures and momentum in private demand.

The final 2024 meeting was not expected to deliver a rate cut, keeping the official cash rate at 3.6% after deliberations.

ANZ reiterates a prolonged hold at 3.60% for an extended period, countering expectations of a late-2026 cut.

Although inflation rose to 3.8% in October, with a 3.3% trimmed mean, ANZ views the rise as likely temporary.

November labor data were anticipated to show unemployment near 4.3%, with roughly 25,000 jobs added and a stable participation rate around 67%.