We argued after the September board meeting that the Reserve Bank of Australia had already telegraphed tolerance for softer growth if inflation demanded it. The September labour force release forces an update: payrolls fell by 39,000 in a month, unemployment held at 4.7 percent, and market pricing for a Melbourne Cup day hike collapsed. The trade-off is no longer theoretical.
Minutes versus markets
Hawkish September minutes—unanimous on the 4.6 percent cash rate and focused on domestic capacity—predate both the August trimmed-mean slowdown to 0.2 percent month-on-month and this jobs shock. Using those minutes to justify another increase without fresh board deliberation would confuse households already cutting discretionary spend.
Westpac and ANZ still pencil in a November hike; Commonwealth Bank calls the meeting “live.” We think the burden of proof shifted: absent a violent inflation surprise on 28 October, holding with candid guidance beats another 25 basis points that mainly punishes mortgage holders still rolling off fixed rates.
Why unemployment staying flat still hurts
The rate unchanged at 4.7 percent masks falling employment as participation normalises. Analysts noted the driver shifting from rising participation to outright job losses—particularly in interest-sensitive sectors. That is the RBA’s desired mechanism for cooling prices, but it arrives faster than the August Statement on Monetary Policy implied.
Financial stability still cuts both ways
The Board has stressed that many borrowers have buffers. True—but aggregate savings are unevenly distributed, and card delinquencies tick higher as banks reprice rewards programs after payment reforms. A pause is not a pivot to easing; it is recognition that cumulative tightening may be sufficient.
What would change our view
A 0.9 percent quarterly trimmed-mean print would reopen the hike debate; 0.8 percent or lower would cement a hold through year-end. Global oil spikes from Middle East shipping risk are a tail risk, but the exchange rate already softened, importing some disinflation via import prices.
Politicians will cheer any pause in an election cycle sensitive to mortgage pain. The RBA should ignore that noise and publish a statement that acknowledges labour market loosening without declaring victory on inflation.
Our call
Hold in November, keep optionality for 2027, and stop pretending September minutes alone answer October’s data. Australians paid for restrictive policy; they deserve a board that reads new prints before pressing send again.
Fiscal policy is not riding to the rescue
State infrastructure pipelines remain busy, but federal spending is constrained by health and defence commitments. That means monetary policy is still doing the heavy lifting on demand, which raises the stakes for any mis-timed hike. If the Board pauses, it should pair the decision with clear guidance that government programs will not be allowed to reheat prices through untargeted rebates.
We are not calling for cuts—only honesty that the inflation fight is shared. A hold in November keeps that bargain intact.