The RBA left the cash rate on hold for November, and the latest inflation and unemployment figures have dampened prospects for the next interest rate cut. Uncertainty surrounds the rate market at the moment. Analysts and the markets suggesting another cut may possibly not eventuate until after the RBA’s February meeting next year. Leaving businesses with a potentially challenging scenario for planning their finance requirements for 2026.

The prospects for a rate cut before the end of 2025 were looking positive around mid-year. But the release of the September Quarter Consumer Price Index, inflation figures, a week before the RBA’s November meeting, dashed those prospects. The increase revealed surprising the markets and the RBA Monetary Policy Board.

With no rate in November and little chance of one in December, businesses may need to assess their options for waiting for a cut or securing their best possible rates to proceed with their finance needs now. To assist, we cover off on the issues affecting the next interest rate cut to clarify the scenario and provide guidance on securing affordable business finance rates.

Data Dampens Interest Rate Cut Prospects

The key data that dampened the chances of a November rate cut was released by the Australian Bureau of Statistics (ABS) on 29 October. Just a week before the RBA Monetary Policy Board met to make their cash rate decision.

The data revealing that the CPI had jumped 1.3% for the September quarter, putting annual inflation at 3.2%. An increase from 2.1% recorded in the June quarterly report. In releasing the report, Michelle Marquardt from the ABS, noted the increase as the highest quarterly result since the 2023 March figures. Electricity prices were the biggest contributor to the rise.

Inflation is at the centre of RBA rate decisions with the 2-3% being targeted by the Bank. The September results was a shock to the sharemarket and was noted by the RBA Governor as a key reason for the cash rate hold.

For those hoping that the inflation figures may ease and allow for a rate cut soon, the ABS dampened those chances with the release of the October Unemployment figures on 13 November. Unemployment fell to 4.3% from the previously adjusted rate of 4.4% which was an increase on the previous month.

A fall in unemployment an indication of a tight labour market. Conditions not conducive to easing rates and an indicator noted by RBA Governor Michele Bullock at the November meeting. Ms Bullock noting that the labour market appeared stronger than Bank expectations.

RBA – No Nov Interest Rate Cut

The Reserve Bank’s Monetary Policy Board held the cash rate steady at 3.6% at its November 4 meeting. Governor Bullock noting the upturn in inflation data as a key reason as the figures were above the Bank’s expectations at its August meeting.

While Ms Bullock noted that there were temporary factors behind the jump in inflation, the forecast was for the figure to increase in coming quarters. A figure of 2.7% by 2027 was quoted. The Governor also highlighted both domestic and global uncertainty in economic activity. Changes in trade policies globally expected to adversely impact growth globally.

Tight conditions in the labour market were also mentioned, this being 9 days prior to the release of the October unemployment data. The next RBA Monetary Policy Board meeting will be held on 8-9 December but a rate cut is looking highly unlikely at that time.

Should you wait for the next interest rate cut?

With all the key economic factors affecting interest rates now released, a clearer picture of the rate market is forming. Essentially, businesses should not count on a reduction in rates until possibly some time in 2026, based on commentary from analysts.

To determine the most suitable way forward when investments in new assets and cash flow support for the new year are being considered, businesses may need to weigh up their options. Using our Finance Calculator may assist in this process. Different rates can be used to calculate repayments and the total interest payable on a loan to see how waiting or moving now may differ.

If requiring cash flow support with an Overdraft for 2026, the decision may be easier as this credit facility has a variable interest rate. If the RBA does move to cut the cash rate in the new year, the rate on your overdraft would also be lowered.

If considering acquiring new assets, Chattel Mortgage, Lease, CHP and Rent-to-Own offer fixed rates which will remain unchanged

Issues business owners may include in their considerations are what the downside for the business may be in waiting for a rate cut before taking on finance. Comparing any savings on repayments and interest charges by waiting for a lower rate against any income or productivity gains the business may forego in that timeframe.

How to Secure Affordable Rates

We are unlikely to see the majority of commercial credit lenders lower their rates following the RBA November decision. While the rate prospects are uncertain, we focus on always securing the most competitive business finance rates. Utilising our services and access to a vast lending market, presents operators with the opportunity to secure their most affordable rates on asset and other types of commercial finance.

Use our current rates as a guide for planning purposes and have an obligation-free discussion with one of our brokers around how we can assist in securing workable finance for your business.

With no interest rate cut in the forecast, secure competitive rates through Business.Finance 1300 000 033.    

DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS