Insights

The Reserve Bank of Australia (RBA) Board decided to leave the cash rate unchanged at 3.60% at its December meeting.

The move was in line with expectations given continued upward inflation pressure which has seen expectations of rate relief largely shelved for 2026, with some even posturing that rate hikes should be back on the table.

Key changes from the November statement were as follows:

• Reconfirmed their belief that the recent uptick in inflation is due to temporary factors, whilst noting their uncertainty about how much emphasis to place on the new monthly CPI data series.
• Admitted there are signs of a more broadly-based pick-up in inflation, part of which may be persistent.
• Noted that money market interest rates and government bond yields have risen more recently.
• Broader measures of wages continue to show strong growth.
• The pick-up in momentum in domestic economic activity and inflation has been stronger than anticipated, particularly in the private sector.
• Removed previously highlighted references to trade policy developments, tariffs, and broader range of geopolitical risks remaining a threat to the global economy.