RBA Review: Hawkish tiit

The RBA has kept the cash rate unchanged at 3.6% in the November 4th meeting as per forecast. With headline monthly inflation rising to the upper band of target range in Q3 and show little signs of moderation in October, the RBA thus revised their inflation forecast higher and see both trimmed mean and headline CPI to be above target range throughout most of 2026. They also only assume one more rate cut in 2026, which bring rates to around 3.35%.

The recent strength in headline CPI have driven RBA's forecast for CPI higher and seems to change their rate path with one less cut. Despite transitory factors are playing their part, the RBA seems to believe domestic demand and global factors will drive inflation higher, where we believe to be slightly drastic. Throughout the statement, we could see a lot of uncertainty between the lines where we could read as the continual of data dependency, just like previous statement. It warrants caution for dovish tilt in coming meetings.

Yet, we do not see significant deviation from their forecast in a short run. The call for next rate cut to be in Q1 2026 should be aligned if we do not see any new economics policy (energy rebates) rolling out from the Australian government.