[Latest RBA Trends] Reserve Bank of Australia to Hold Rates in July, Gradual Rate Cuts Expected from August Onwards | Economic and Monetary Policy Outlook

June 2025 | Sydney — Regarding the monetary policy of the Reserve Bank of Australia (RBA), Westpac Bank predicts that "the July board meeting will result in a hold, followed by gradual rate cuts starting in August." The background to this includes a slowdown in inflation, decelerating economic growth, and changes in employment and demographic trends. This article explains the latest forecasts, key economic indicators, upcoming risks, and points of interest.

Summary: The Latest Scenario for RBA Monetary Policy

• The July 2025 board meeting is expected to keep the policy rate at 3.85%.
• 25bp rate cuts are expected in both August and November, with further cuts likely in the first half of 2026.
• Key factors for easing include disinflation, slower GDP growth, and a decline in the rate of population increase.
• Consumer Price Index (CPI) and labor statistics will influence future monetary policy.

Background: Trends in Inflation, Economy, and Employment

Inflation Trends

After peaking in 2024, the inflation rate is showing a clear downward trend into 2025. Westpac forecasts that the "trimmed mean" inflation will likely fall below the midpoint of the RBA's target range (2–3%), which strongly supports the start of a rate cut cycle.

GDP Growth and Slowing Consumption

The latest GDP growth rate has slowed to 2.3%, and consumer sentiment is also cautious. Demand for housing and investment growth remain limited, and domestic demand is weakening.

Labor Market and Wage Trends

While the labor market may appear robust, stagnating wage growth is weighing on consumer sentiment. Reduced immigration and slower population growth are also holding back overall demand.

Westpac’s Forecast: Upcoming Rate Cuts and Risks

Westpac notes that "the RBA is reluctant to engage in aggressive, front-loaded easing and will maintain a gradual, cautious rate cut path." They expect two 0.25% cuts in August and November, with two more in early 2026, bringing the policy rate down to 2.85%. Timing and frequency may change depending on disinflation and other economic data.

Chief Economist Luci Ellis commented, "By the end of the year, weaker consumption and business activity could result in unexpected disinflationary pressures," while also citing risks from weak transition of demand from the public to private sector and subdued wage growth.

Key Points to Watch Going Forward

• Board meetings and rate announcements in August and November
• Key economic indicators such as CPI, GDP, and labor statistics
• Changes in consumer spending, corporate investment, and demographics
• Market interest rates and currency market reactions

Conclusion: Australian Monetary Policy at a Turning Point—Stay Updated on FIXIO Blog

If Westpac’s forecast proves accurate, the RBA is highly likely to proceed with a gradual rate cut cycle from the second half of 2025 into 2026. Fluctuations in interest rates will impact mortgages, corporate investments, and exchange rates.
For the latest news on monetary policy, economic statistics, market outlooks, and analysis articles, be sure to check the FIXIO Blog regularly.

*This article is written from the perspective of technical analysis and fundamental analysis. Please make final investment decisions at your own discretion.