RBA to hold rates on September 30 but cut likely after Q3 inflation: Reuters poll

By Devayani Sathyan

BENGALURU (Reuters) -The Reserve Bank of Australia will keep its cash rate at 3.60% next week, all the economists in a Reuters poll said, as the labour market remains tight and policymakers wait to see firm signs that inflation is?easing.

While the consensus view for a year-end rate of 3.35% remained intact, a handful of respondents pushed back their November rate cut forecasts, pointing to higher monthly inflation readings.?

Australia's monthly consumer price index (CPI) rose 3.0% in August from a year earlier, accelerating from 2.8% in July.

After multiple rate cuts, economic growth picked up in the second quarter and the jobless rate has held relatively steady, suggesting the RBA can slow its pace of easing.?

This year, it cut rates in February, May and August following the release of quarterly inflation data.

All 39 economists in the September 22-25 Reuters poll forecast the RBA would hold its official cash rate at 3.60% at the end of its two-day policy meeting on September 30.

"The RBA has little incentive to rush. Unemployment has crept up...but the labour market remains relatively tight compared with pre-COVID norms," said Sunny Kim Nguyen, head of Australian economics at Moody's Analytics.?

"So the Board can afford to wait, especially for the full Q3 inflation numbers, to make sure it does not reignite price pressures prematurely."

Banks ANZ, CBA and Westpac expect a 25 basis point rate cut in November and NAB sees rates remaining at 3.60% until May.

Over 80% of respondents - 32 of 39 - expected a 25 basis point cut to 3.35% by the end of 2025, while seven predicted no change, up from just one in August's poll.

"I do think that the quarterly inflation data will leave the door open for them to move in November," said Besa Deda, chief economist at William Buck, adding, however, that it wasn't a done deal and that recent data suggested that the RBA would remain cautious.?

Of the 38 respondents who took a longer-term view, 23 forecast one more rate cut in the first quarter of 2026 to 3.10%, while 13 predicted rates at 3.35% by end-March and two said?3.60%.?

However, ANZ economist Madeline Dunk said if there is a surprise uptick in inflation and if the labour market remains strong there is a good chance the RBA would not cut rates in November.

"We've got all these signs of momentum picking up and we are yet to feel the full impact of those three rate cuts that have already been delivered...Really for us the question at the moment is does the RBA need to cut at all?"?

(Other stories from the September Reuters global economic poll)

(Reporting by Devayani Sathyan; Polling by Vijayalakshmi Srinivasan and Rahul Trivedi; Editing by Hari Kishan, Kirsten Donovan)