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Rise in unemployment increases chance of an August rate cut
17 July 2025
The unemployment rate has risen to 4.3% today, suggesting the jobs market is softening, setting the stage for another RBA cut potentially as soon as 12 August.
The ABS monthly Labour Force figures, released today, show unemployment increased from 4.1% in May to 4.3% in June, in seasonally adjusted terms, to the highest level since November 2021.
While today’s data paves the way for a rate cut next month, the key piece of the puzzle for the RBA will be the quarterly CPI data to be released on 30 July.
All four big banks point to an August RBA cut
The economic teams from Australia’s big four banks expect the next cash rate cut will come at the end of the RBA’s Monetary Policy Board Meeting on 12 August.
However, the banks are split on how many RBA rate cuts are still to come. CBA and ANZ expect a total of two more cash rate cuts, NAB predicts three further RBA cuts and Westpac expects a further four cuts through to mid-next year.
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| Current big four bank cash rate forecasts |
|||
|---|---|---|---|
| Bank | Next cut | No. of cuts to come | Cash rate at end of cuts |
| CBA | 12 August | 2 | 3.35% |
| Westpac | 12 August | 4 | 2.85% |
| NAB | 12 August | 3 | 3.10% |
| ANZ | 12 August | 2 | 3.35% |
What would the impact of an August rate cut look like for borrowers?
An owner-occupier with a $600,000 debt today, and 25 years remaining on their loan, could see their monthly repayments drop by $90 on the back of a 0.25 percentage point RBA cut in August, assuming the banks pass it on in full to existing variable rate borrowers.
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| Potential impact of an August RBA cash rate cut |
||
|---|---|---|
| New minimum monthly repayments | Difference | |
| $500,000 | $3,086 | -$75 |
| $600,000 | $3,703 | -$90 |
| $750,000 | $4,628 | -$113 |
| $1,000,000 | $6,171 | -$150 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest. Calculations assume a cut in August and that the banks pass it on in full to existing variable customers.
Unemployment the latest piece in the rate cut puzzle
Canstar’s data insights director, Sally Tindall says, “Today’s unemployment figures are the next piece in the puzzle building an already strong case for the RBA to cut the cash rate in August.”
“This rise in unemployment isn’t cause for alarm, however, Australia’s previously rock solid jobs market is showing signs of wear.
“If inflation continues to trend down, as expected, the RBA will have very little reason to delay its next cash rate cut, especially when so many Australians are still struggling under the weight of their mortgage.
“The RBA’s mandate is to keep prices stable, but also Australians in jobs, and today’s Labour Force figures are an important reminder of this. Inflation is coming down, but the strength of the jobs market is starting to slip. If the data continues in this direction, the case for a rate cut will be impossible to ignore.
“An August cut won’t move mountains, but it’ll offer some sorely needed breathing room for households juggling high mortgage repayments and rising living costs.
“If lenders pass on the full 0.25 percentage point cut, a household with a $600,000 loan could see their minimum repayments drop by $90 a month.
“However, last meeting’s shock decision is a reminder that nothing is set in stone until a cut hits your bank account. The RBA still needs to drop the hammer on the next rate cut, but also, banks need to then pass it on to their variable customers.
“While we fully expect the banks to do this, should there be a cut in August, keep the pressure on your lender, even in the lead up to the next RBA meeting by asking for your own personalised cut.”
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This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
