RBA Shock: Rates Stay at 3.85% for Millions

2025-09-01 11:34:30

The
Reserve Bank of Australia
(RBA) has defied expectations by deciding to
hold the official cash rate
at 3.85 per cent. The
central bank
was largely predicted to provide the
third rate cut of the year
on Tuesday, but
homeowners will have to hold on
for at least another few weeks.

The RBA decision was not unanimous, with the board publishing an unattributed record of votes in the post-meeting statement for the first time. Today’s decision was made with six in favour of a hold and three against.

The RBA Board said inflation had continued to moderate and had fallen "substantially" since the peak in 2022.
Underlying inflation
eased to 2.4 per cent over the year to May, which was down from 2.8 per cent in April and the lowest in three and a half years.

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The board said the risks to inflation had become more balanced and the labour market remained strong. Nevertheless, it said it remained "cautious about the outlook".

"With the cash rate 50 basis points lower than five months ago and wider economic conditions evolving broadly as expected, the Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the board said.

Do you have a story? Email stew.perrie@yahooinc.com

Hold defies expectations

All of the
Big Four bank economic teams
were expecting a 0.25 per cent cut today, with the
majority of experts all predicting a cut
.

Mozo personal finance expert Rachel Wastell told

Yahoo Finance

today’s "surprise" proves mortgage holders shouldn’t be waiting for the RBA or their lender to cut their rate for them.

"The smarter move is to compare and switch. There’s often no prize for loyalty and no reward for waiting. If your rate is above 6 per cent, it’s time to ask why," she said.

Just four experts surveyed by Finder expected a hold today.

The Housing Industry Association’s Tim Reardon said unemployment was still low and believed the RBA would wait until quarterly consumer price index (CPI) data is released at the end of this month to see how Australia is faring in its fight against inflation.

UNSW’s Nalini Pr agreed the Board would want a longer-term look at inflation before a third rate cut.

Cameron Murray from Fresh Economic Thinking felt inflation was in the RBA’s Goldilocks zone of 2 to 3 per cent, and a cut isn’t necessary right now.

“Current rate settings have achieved a balance between growing consistency in maintaining the RBAs inflation target and a strong economy reflected in a robust and resilient labour market," Andrew Wilson, My Housing Market added.

According to Canstar, a homeowner with a $750,000 loan was set to save $114 per week if the RBA cut rates on Tuesday.

When is the RBA meeting in 2025?

If you didn’t get the news you were hoping for, rest assured there are several more chances of a rate cut this year.

Here are the remaining dates it will meet in 2025:

• August 11 to 12

• September 29 to 30

• November 3 to 4

• December 8 to 9

The meetings always take place on a Monday and Tuesday, with the announcement coming on the second day at 2:30pm AEST/AEDT.

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This article originally appeared on Yahoo Finance AU at
https://au.finance.yahoo.com/news/rba-holds-interest-rates-at-385-per-cent-in-shock-decision-for-millions-043030947.html