Australia’s unemployment rate has climbed to a four-year high, reigniting speculation that the Reserve Bank of Australia (RBA) could cut interest rates again when it meets on Melbourne Cup Day.
Key Takeaways
- Unemployment rose to 4.5%, the highest in four years.
- The RBA may consider another interest rate cut in November.
- Experts warn that lower rates could further inflate house prices.
- Inflation data due at month’s end will likely influence the RBA’s final decision.
- Analysts remain divided, with some predicting no cut until early 2026.
Unemployment Rise Fuels Calls for Rate Relief
Australia’s jobless rate has ticked up to 4.5%, marking its highest point since 2021. The unexpected rise has renewed calls for the RBA to ease monetary policy when it meets in early November.
The increase in unemployment reflects slowing economic activity, and according to economists, it could justify a rate cut to stimulate growth. However, some warn that another cut could further heat up the property market, especially with the expanded Home Guarantee Scheme already lifting buyer demand.
“I think the housing market is already supercharged, and any further reduction in interest rates would put additional pressure on prices,” said Professor Christian Nygaard, housing economics expert at UNSW.
“That would make it even more difficult for first-home buyers and young Australians to get into the market.”
Balancing Housing Growth and Economic Stability
Despite concerns about housing affordability, Centre for Independent Studies chief economist Peter Tulip said the RBA is unlikely to let property prices dictate monetary policy.
“The prospect of a surge in prices, however, won’t persuade the RBA to put the rates on a pause,” he said.
“That’s the role of prudential regulations by APRA. If there were excessive price rises, the central bank would work in concert with them.”
Tulip noted that previous cuts this year have already stimulated growth, and more easing could follow if inflation stays within target levels.
Inflation Data to Be the Deciding Factor
The RBA’s decision is expected to hinge on end-of-month inflation figures.
If inflation remains subdued, the central bank may see room to lower rates. But if construction, rent, or services costs continue rising faster than expected, the RBA will likely keep the cash rate on hold.
NAB market analyst Taylor Nugent told Domain that the RBA is likely to wait for clearer inflation control before acting:
“Recent indicators of inflation were stronger than expected, mostly due to higher construction and rental prices,” he said.
“Even with the lift in unemployment, there’s no real urgency to cut further — especially if bad news is coming on inflation.”
Outlook: A Delicate Balancing Act
For now, economists agree that the RBA faces a balancing act — easing pressure on households without triggering another property price surge.
If inflation moderates, mortgage holders could see rate relief by November, but if it stays stubbornly high, the next cut may not come until early 2026.
