Economic News

Financial markets at the time of the September meeting were pricing a noticeably higher cash rate path than the one assumed in the Reserve Bank's August forecasts, a gap that reflects how fast expectations moved over a matter of weeks.

Six weeks after a senior Reserve Bank official described monetary policy as "somewhat restrictive", the Board lifted the cash rate again, and the explanation lies in a mix of new inflation data, doubts about the neutral rate and the gap between restraining demand and …

With home values falling faster than expected, the Reserve Bank's latest minutes offer a notable piece of reassurance: very few borrowers are in negative equity, and that is likely to remain the case even if housing prices were to fall by 20%.

National home prices were sliding by about 0.5% a month by mid-2026, and by the time of the September meeting the Reserve Bank's Board had concluded the decline was running faster than expected, yet it still judged a further rate rise was warranted.

In August, Assistant Governor Christopher Kent measured the 2026 housing downturn against two earlier slumps and found it was not yet as steep, but the Reserve Bank's September minutes show the decline has since run faster than expected.

Using a set of clearly stated hypothetical assumptions, this walk-through shows how four 25 basis point increases could add roughly $646 a month to the repayments on a $1 million home loan, with the latest rise alone accounting for about $164.

Governor Michele Bullock boiled the inflation problem down to a single gap, underlying inflation running about one percentage point above the 2.5% midpoint, and that yardstick goes a long way to explaining September's rate rise.