Australia’s quarterly inflation report, due Wednesday (29 October), is expected to show underlying price pressures strong enough to keep the Reserve Bank of Australia (RBA) from easing policy further next week.
Judo Bank chief economic adviser Warren Hogan and economist Matthew De Pasquale said the September quarter result will be the key determinant of whether the RBA holds or delivers what most economists expect to be the final interest rate cut of the cycle.
“We expect Q3 trimmed-mean inflation to print at 0.9 per cent, which we think will be high enough to keep the RBA on hold in November and drive a significant upward revision to its inflation forecasts through FY26,” they said.
Based on the first two monthly releases of the quarter, the pair see a high probability that Q3 trimmed-mean inflation will land between 0.8 and 1.0 per cent, putting year-end inflation on track to reach around 3 per cent.
“A stronger-than-expected September quarter print, ongoing labour shortages and clear improvements in consumer spending and business trading conditions raise the risk of an upward revision to the 2026 inflation profile as well, leaving little scope for further easing,” they added.
The pair said the cash rate could remain at 3.6 per cent for an extended period, suggesting the RBA may already have delivered its final cut for this cycle.
Westpac senior economist Justin Smirk said that while August consumer price index (CPI) was below expectations, the September quarter is still expected to post a 1.1 per cent rise.
“Electricity prices fell sharply but gains elsewhere kept our September quarter CPI estimate at 1.1 per cent,” he said.
Smirk placed the trimmed mean at 0.84 per cent, with upside risk from dwelling prices.
“The RBA likely expects 0.6 per cent per quarter for the next two quarters to reach 2.6 per cent per year at end 2025,” he said, adding that inflation should fall into the lower half of the RBA’s target band in 2026.
Similarly, CBA senior economist Trent Saunders forecast headline CPI to rise by 1.1 per cent in Q3, lifting the annual rate to 3.0 per cent, while the trimmed mean is expected to increase by 0.8 per cent.
“If our forecasts are correct, we expect the RBA Monetary Policy Board will leave the cash rate on hold at its November meeting, with the next cut pencilled in for February 2026,” he said.
Meanwhile, ANZ economists projected trimmed-mean inflation of 0.9 per cent quarter-on-quarter and headline inflation of 1.2 per cent.
“A trimmed mean print of 0.9 per cent would see the two-quarter pulse annualising around, or even above, the top of the RBA’s 2–3 per cent target band and a stalling in year-on-year disinflation,” they said.
ANZ said that would likely prevent the RBA from easing in November, though a final rate cut in February remains possible.
“Part of the challenge for the board will be assessing whether the rise in the unemployment rate is temporary or permanent,” they added, noting that the pause in jobs growth in health and care sectors is expected to be temporary.
