CPI spike puts a nail in the coffin for a 2025 cash rate cut
29 Oct 2025
A sharp rise in quarterly inflation has squashed any chance of another rate cut in 2025 and casts doubt over further cash rate cuts in the cycle.
Australia’s CPI results, released today from the ABS for the September quarter, saw annual headline inflation print at 3.2%, up from 2.1% in the previous quarter, while trimmed mean inflation jumped from an annual rate of 2.7% to 3.0%.
The monthly CPI indicator soared even higher, with headline inflation rising to 3.5% annually.
Key drivers were housing at 2.5% annually, recreation and culture (+1.9%) and transport (+1.2%). Electricity recorded a hefty 23.6% annual increase, largely due to the timing of when some households received their federal rebates, but also as a result of the mid-year price hikes.
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| ABS Quarterly CPI – annual movement | ||
|---|---|---|
| Quarter | Headline inflation | Trimmed mean |
| Dec-23 | 4.1% | 4.2% |
| Mar-24 | 3.6% | 4.0% |
| Jun-24 | 3.8% | 4.0% |
| Sep-24 | 2.8% | 3.6% |
| Dec-24 | 2.4% | 3.3% |
| Mar-25 | 2.4% | 2.9% |
| Jun-25 | 2.1% | 2.7% |
| Sep-25 | 3.2% | 3.0% |
Big banks now all expect no change this year, CBA and Westpac update forecasts
CBA and Westpac economic teams have revised their cash rate forecasts following today’s CPI results. CBA now expects no further cash rate cuts in this cycle.
Westpac has today ruled out a November cut, however, its full cash rate forecast is under review.
As a result, all four big banks now expect the cash rate to remain on hold at 3.60% for the remainder of 2025.
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| Current big four bank cash rate forecasts | |||
|---|---|---|---|
| Bank | Next cut | Total cuts to come in cycle | Cash rate at end of cuts |
| CBA | – | 0 | 3.60% |
| Westpac | Under review | – | – |
| NAB | 5 May | 1 | 3.35% |
| ANZ | 3 Feb | 1 | 3.35% |
It’s now up to borrowers to get a lower rate
With the cash rate likely to remain on hold for the remainder of 2025, borrowers seeking rate relief should be on the lookout for a competitive rate.
Rate tracking by Canstar shows nine lenders have cut variable rates out of step with the RBA including big four bank Westpac, taking its lowest variable rate down to 5.24%, and most recently CBA’s offshoot Unloan, whose lowest variable rates now start from 5.19%.
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| Lenders that have cut at least one advertised variable rate in the last month | ||
|---|---|---|
| Lender | Maximum cut %-points | Lowest variable rates from |
| Aussie | -0.25 | 5.54% |
| Bank of China | -0.10 | 5.18% |
| Bank of Queensland | -0.05 | 5.33% |
| Bank of Us | -0.05 | 5.27% |
| Bankwest | -0.10 | 5.44% |
| MOVE Bank | -0.10 | 5.24% |
| Regional Australia Bank | -0.05 | 5.24% |
| Unloan | -0.05 | 5.19% |
| Westpac | -0.10 | 5.24% |
Source: Canstar.com.au. Note based on owner-occupiers paying principal and interest repayments, Westpac rate is for online applications only. LVR requirements apply. Lenders are listed alphabetically.
Cash rate cut in 2026 still on the cards, but not guaranteed
On Monday night, Governor Bullock reconfirmed that the central bank thought the cash rate was still “a little bit restrictive”, which means at least one more further cut could still be on the cards in 2026.
However, with households, by and large, coping under the pressure of a 3.60% cash rate and the economy still moving in the right direction, there’s a chance we won’t see any further cash rate cuts next year either.
Should a cut materialise next February, as ANZ currently expects, an owner-occupier with a $600,000 mortgage and 25 years remaining would see their minimum monthly repayments drop by a further $87, assuming banks pass it on to their variable customers.
With three cuts already in effect, the total drop across the February, May, August as well as a cut in February would be $358.
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| Impact of an RBA cuts next February on minimum monthly repayments | ||
|---|---|---|
| Loan size at start of cuts (Feb 25) | Cut in February | Across 4 cuts (Feb 25, May 25, Aug 25, Feb 26) |
| $600,000 | -$87 | -$358 |
| $750,000 | -$108 | -$448 |
| $1 million | -$144 | -$597 |
Source: Canstar.com.au. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2025 at the RBA average existing customer variable rate. Calculations assume the RBA cuts the cash rate in February 2026 and banks pass on each cut in full to existing variable customers the month after.
Canstar’s data insights director, Sally Tindall says, “Three months of higher-than-expected monthly inflation results rules out further cash rate cuts in 2025.”
“While the rise in unemployment from 4.3 per cent to 4.5 per cent hasn’t passed the RBA by, Governor Bullock has already this week confirmed she won’t “leap at a single number”.
“However, the higher-than-expected unemployment figures highlight the now competing priorities for the central bank of reining in inflation and keeping Australians in jobs.
“CBA and Westpac have both revised their cash rate forecasts on the back of this CPI data, with CBA effectively calling time on rate cuts.
“With the prospect of further cash rate cuts now off the cards, at least for the remainder of the year, but potentially in this current cycle, now is the time for borrowers to take charge of their mortgage.
“In the past month alone, nine lenders have cut variable rates out of step with the RBA including big four bank Westpac, and most recently CBA’s offshoot Unloan.
“Westpac’s variable rates now start from a highly competitive 5.24 per cent, provided borrowers are willing to apply directly with the bank online, while Unloan’s lowest variable rates now start from 5.19 per cent.
“The catch? These rate cuts are reserved for new customers, but they can still be your ticket to getting a better deal.
“If you’re paying more than what your bank is offering to new customers, it’s worth asking why. After all, the evidence that they can drop this low is right there on their websites, they’re just not doing it for you.”
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
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