Mortgage holders aren’t expected to get an early Christmas present from the Reserve Bank, with a cut to interest rates all but off the table.
The central bank will begin two days of talks on Monday in its final board meeting of the year, after which the official cash rate is expected to remain at 3.6 per cent.
Tuesday’s rate decision comes after the Reserve Bank started 2025 with a rate cut, followed by a further two easings that brought welcome cost-of-living relief for borrowers during the year.
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But an uptick in the consumer price index has poured cold water on any chances of another interest rate reduction.
“A hot inflation reading in October has sealed the case that the RBA’s current policy easing is now over after three rate cuts,” CommSec chief economist Ryan Felsman said.
The latest data showed annual inflation rising to 3.8 per cent from 3.6 per cent a month prior, well above the Reserve Bank’s target band of between two and three per cent.
Trimmed mean inflation, which removes volatile price movements and is the central bank’s preferred measure, was at 3.3 per cent in the 12 months to October.
A rise in house prices and the end of state rebates for power prices have been blamed for the spike.
NAB economist Taylor Nugent said while the Reserve Bank was still expected to keep rates on hold, there would be signs to watch following Tuesday’s meeting.
“We anticipate a more hawkish tone in the accompanying statement and press conference,” he said.
“With October CPI pointing to further breadth in inflation pressures and signs of momentum in private demand, there has been a further shift in the distribution of risks to the monetary policy outlook.”
Westpac economists are still optimistic about another cut to the cash rate in 2026.
The bank is tipping rate reductions in May and August if inflation eases.
Labour force figures for November will be released on Thursday, and CommSec economists have tipped the unemployment rate of 4.3 per cent will remain steady, with the Australian economy set to add about 25,000 jobs for the month.
The labour force participation rate is also expected to remain stable at 67 per cent.
US shares eked out minor gains on Friday as the release of delayed data buoyed expectations of an imminent interest rate cut by the Federal Reserve.
The Dow Jones Industrial Average rose 104.05 points, or 0.22 per cent, to 47,954.99, while the S&P 500 gained 13.28 points, or 0.19 per cent, to 6,870.40.
The tech-heavy Nasdaq Composite gained 72.99 points, or 0.31 per cent, to 23,578.13.
Australian share futures fell slightly, down 13 points or 0.15 per cent to 8620.
Local stocks scraped to a second straight week of gains as the S&P/ASX200 edged 16.2 points higher on Friday to 8,634.6, a daily increase of 0.19 per cent.
The broader All Ordinaries crept up 19.4 points, or 0.22 per cent, to 8,926.1.
