Inflation to kick up
No surprises for Melbourne Cup Day, with interest rates on hold at 3.60 per cent, and Half Yours winning the big race.
The Reserve Bank of Australia's forecasts, which assumed market pricing of one further interest rate cut in 2026, now see trimmed mean inflation exceeding the top of the target 2 to 3 per cent band at the end of 2025, at 3.2 per cent.
That said, the factors that pumped up inflation last quarter are partly expected to be temporary, and inflation is expected to fall back to 2.6 per cent through calendar year 2027.
Source: RBA
Of course, there's a lot of uncertainty about what comes next, but with household incomes getting squeezed it feels like monetary policy is still a bit restrictive, but there will be further monetary easing unless it's really required, it seems.
Falling job vacancies appear to imply that the unemployment rate will continue to rise towards 5 per cent and beyond, but the RBA's forecasts are somewhat optimistically forecasting that the unemployment rate will peak at 4.4 per cent (it's currently at 4½ per cent).
The Reserve Bank's reading is that the labour force is still a little tight.
I guess it depends.
If you're looking for an available tradie or construction worker, it may well be.
On the other hand, if your job is about to get junked by AI, then it probably doesn't feel like a tight labour market.
In the meantime, it seems that the RBA is well aware of what the Treasury has decided to play down, that the first homebuyer scheme is going to put upward pressure on rising housing prices, in turn increasing the wealth effect.
Interesting stuff, with interest rates on hold until at least February 2026.
The Australian 3-year bond yield closed a little higher over the day at 3.68 per cent.
---
1. Download our property buying guide
Download our free property buying guide here.
You can also check out a few of our recent property purchases here.
Get in contact with us today if strategic property investment is your thing.
2. Subscribe to our Top 10 Podcasts for Investors
Listen in to our podcasts
The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.
And our popular Low Rates High Returns Show also remains available on Spotify.
3. Subscribe for my free daily blog
Subscribe for my free daily blog with more than 4 million hits here.
You can also catch up with me daily on Twitter here, where I'm far too active daily and have over 15,400 followers.
By the way, I'm an 8-times published author on finance, investing, and business, so you can check out some of my books here.
My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - check out our free Buy Right podcast series here.
4. Work with me privately
For a limited time you can book in a free diagnosis call with me here, so book in a call today.
