RBA: Easing Cycle Ends, Opens Door for Rate Hikes

■ Policy rate remains unchanged for the third straight meeting; more time needed to assess ongoing inflation pressures.  

■ Discussions underway on responses to potential rate increases; move towards tightening based on observed price and employment conditions. 
 
 
   The Reserve Bank of Australia (RBA) kept its policy rate at 3.6% at its board meeting on the 9th. This is the third consecutive meeting without a rate cut after a total reduction of 0.75% in February, May, and August this year. The statement noted, "Recent data suggest that inflation risks are tilted to the upside, but assessment of the persistence of inflationary pressures requires more time." It also mentioned, "Labour market conditions still appear somewhat tight, but further modest easing is expected. Therefore, the Board judges it appropriate to update the outlook as data changes and to stay cautious." 
Regarding inflation, the statement said, "While the reference value of the monthly CPI, as a new indicator, is uncertain, there are signs of a broader upward trend, some of which may be persistent and therefore need close monitoring." Additionally, it stated that it would closely monitor global economic and financial market developments, domestic demand trends, and the inflation and labor market outlook, using data, outlook, and risk assessments to guide policy decisions. 

 
   At a press conference, RBA President Bullock stated, "interest rate cuts were not on the agenda at all, and no one suggested them," implying that the easing cycle has ended. She also noted that "interest rate hikes were not explicitly discussed at this meeting." Still, she explained that "the scenarios and necessary measures for a possible rate hike at some points next year have been studied and discussed in considerable depth." While she expressed no urgency to raise rates, she said she will "reassess whether financial conditions have only tightened slightly, or whether they have actually exerted sufficient pressure on inflation," based on upcoming labor market data. 
 
   The November employment figures, due on the 11th, are expected to show an increase of only 20,000 jobs compared to the previous month, indicating a slower pace; the unemployment rate is projected at 4.4%, a 0.1 percentage point rise from last month but still in line with the RBA's forecast; the labor force participation rate is expected to stay high at 67.0%. If outcomes meet market expectations, the idea that "the labor market remains robust and the easing cycle has ended" will gain further support. 
After reviewing the November CPI, to be released on January 7, 2026, and the December CPI, to be released on January 28, 2026, the market will pay attention to whether the RBA prepares for a rate hike at the upcoming board meeting on February 2 and 3.