Key Highlights

  • The RBA has not said what would lead it to pause.
  • Inflation relative to the forecast peak of 4.5% is a key signal.
  • Business price-setting and household Inflation expectations are in focus.
  • Key dates include the October CPI on 25 November and the decision on 8 December.

With the next cash rate decision on 8 December, the Reserve Bank's own statements point to a short list of indicators that will shape the Board's thinking – and a crowded calendar on which they will appear.

Nobody outside the Reserve Bank of Australia (RBA) can know what the Monetary Policy Board will decide at its next meeting, and the RBA itself does not pre-commit. What can be done is to read what the Board has said matters, and then line that up against the information due before 2.30 pm on 8 December 2026. That exercise does not predict an outcome, but it does show where the evidence will come from.

The starting point: a split decision

On 3 November the Board raised the cash rate target by 25 basis points to 4.85 per cent. The vote was by majority: six members voted to increase, while three voted to leave the cash rate unchanged at 4.60 per cent.

That split is itself relevant. It means a third of the Board already favoured holding in November. The minutes, scheduled for 11.30 am AEDT on 17 November, are likely to be the first detailed account of the arguments on each side, and may indicate which developments the members who preferred to hold were weighing most heavily.

The Board's public guidance, though, gave no sign of a fixed path. Its statement said: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target." Governor Michele Bullock said: "Returning inflation to target is our priority, and we will do what is necessary to achieve that."

Inflation and the expectations question

The RBA's November forecasts provide a yardstick. Headline inflation "is expected to peak at 4.5 per cent in the December 2026 quarter", and both headline and trimmed mean inflation are "now expected to remain above 3 per cent until end-2027". The latest quarterly figures were 3.9 per cent headline over the year to the September quarter and 3.7 per cent trimmed mean.

The key release before the December meeting is the monthly CPI indicator for October, due on 25 November. The September month reading was 4.3 per cent. Because the RBA has already forecast a rise in headline inflation towards the end of the year, a higher monthly print would not by itself be a surprise. What matters is whether inflation is tracking above, near or below the path the RBA has mapped out – and whether underlying pressures look broad-based.

The Governor was explicit about what worried the Board most: "It is critical that we stop expectations for high inflation from becoming embedded in price-setting decisions". She also said: "we are not tightening monetary policy because of the direct impact of oil prices on inflation."

That focus means the Board will be looking for evidence on how businesses are setting prices and how households expect inflation to evolve. Deputy Governor Andrew Hauser, speaking on 5 November, cited a Macquarie University Business survey which found that firms expecting a faster return to target planned to pass on less of their Middle East conflict-related costs. The RBA's liaison program, which Hauser said involves around 900 meetings a year, is another source of this kind of information. Signs that firms are becoming less willing to pass on cost increases would be relevant to the Board; signs of the reverse would also be weighed.

Jobs, financial conditions and households

The jobs market is the other half of the trade-off. The November Statement on Monetary Policy (SMP) notes that "The Unemployment rate rose by more than expected to average 4.6 per cent in the September quarter", and it forecasts a rise "to a bit over 5 per cent by end-2028".

There is nuance in how that rise came about. The RBA says "employment growth held up in the September quarter as expected", with higher unemployment largely reflecting higher-than-expected labour supply. Whether that remains the story, or whether employment growth itself begins to soften, is likely to feature in the Board's discussion.

More broadly, the SMP judges financial conditions "to be restrictive, but with various cross-currents". Housing prices "have declined by more than expected", while business Credit growth remains very encouraging and government bond yields are "around their highest levels in many years".

On household resilience, the October Financial Stability Review estimated that around 2 per cent of variable-rate owner-occupier borrowers had a cash-flow shortfall and fewer than 1 per cent were in negative equity. Those estimates predate the November rise. The Governor's framing of the trade-off – "Some pain now will prevent even worse pain down the track" – indicates the Board expects some strain as part of the process.

The calendar to Christmas

RBA events scheduled between now and the December meeting include:

  • 17 November: Bullock on a panel at the ASIC Annual Forum, Sydney, at 10.00 am AEDT; November Board minutes at 11.30 am AEDT.
  • 19 November: Payments System Board meeting (separate from monetary policy).
  • 20 November: Monetary Policy Board member Renée Fry-McKibbin at CAMA, Canberra.
  • 25 November: monthly CPI indicator for October; a speech by David Jacobs, Head of Domestic Markets, at the Australian securitisation conference, Sydney.
  • 26 November: RBA Bulletin.
  • 8 December, 2.30 pm: cash rate decision.

One scheduled appearance has dropped off. Board member Marnie Baker AM had been due to speak at the ARCA Credit Summit on the Gold Coast on 12 November, but the event was cancelled: "Unfortunately, unforeseen family circumstances prevent Marnie's attendance at this event."

The bottom line

The RBA has not said what would lead it to pause, and it describes its approach as doing what is necessary to return inflation to target. Its own documents, however, point to the evidence it will be weighing: inflation relative to a forecast peak of 4.5 per cent, signs of whether high inflation expectations are taking hold, the balance between employment and labour supply, and how restrictive conditions are affecting households. The minutes on 17 November and the October CPI on 25 November will be the most substantial pieces of that evidence before the Board meets on 8 December.