Aussie Greenbacks: 2nd edition

November at a glance

The Reserve Bank of Australia held the cash rate at 3.60 percent and reinforced that inflation has picked up and is likely to sit above the 2 to 3 percent band for a while. The November Statement on Monetary Policy and the early November decision both framed policy as watchful and data dependent, with a clear focus on underlying price pressures and a still healthy labour market.

October's inflation surprise is the fulcrum. Quarterly CPI printed 3.2 percent year on year, with trimmed mean at 3.0 percent, and the new monthly series showed headline CPI at 3.8 percent and trimmed mean around 3.3 percent, reflecting electricity rebate rolloff and sticky services. That mix pushed markets and economists to fade nearterm cut hopes and consider a longer hold through 2026.

RBA communications since the hold have been notably firm. The Board did not consider the case for a cut, and analysts characterised the stance as a hawkish pause given the breadth of recent inflation. Consensus now centres on an extended hold, with some forecasters flagging upside risk if core disinflation stalls.

Global snapshot, what changed since October

In the United States, the Federal Reserve cut the funds rate by 25 basis points in September to 4 to 4.25 percent and stressed risk management around a softer labour market while inflation remains above target. August CPI confirmed disinflation with bumps, headline at 2.9 percent and core at 3.1 percent year on year, consistent with the Fed's data driven approach into year end.

Europe remained patient. The European Central Bank kept its deposit rate steady, noting inflation close to its mediumterm aim and modest growth, with policy judged to be in a good place for now.

The Bank of England held Bank Rate at 4 percent at its November meeting, with a split vote and guidance that disinflation is progressing, but more evidence is required before easing further.

Japan continued cautious normalization. The Bank of Japan held the policy rate at 0.5 percent, with signals that any further moves will be gradual as core inflation stays above target.

Australia, the November pivot

The RBA's November assessment emphasised that trimmed mean inflation rose 1.0 percent in the September quarter and 3.0 percent year on year, materially higher than expected earlier, while headline inflation jumped to 3.2 percent as energy rebates ended in several states. The Board judged some of the underlying lift to be temporary but expects inflation above 3 percent for much of next year.

Labour markets have eased without cracking. Employment growth slowed a touch more than expected and unemployment rose to 4.5 percent in September from 4.3 percent in August, although vacancies remain high and unit labour costs are still elevated. Housing remains firm, with prices and construction costs picking up and credit readily available.

The external account stayed volatile but intact. August's goods trade surplus narrowed sharply as nonmonetary gold exports fell back from record levels, while imports rose broadly, particularly consumption goods. The swing was consistent with composition effects rather than a structural deterioration.

China's commodity policy noise appeared tactical. Reports indicated temporary pauses in some iron ore cargoes amid pricing disputes, consistent with centralised procurement approaches, and market reaction suggested negotiation rather than a fundamental break.

Implications for Australian expats

For borrowers, an extended hold at 3.60 percent supports planning stability through the holidays, but the RBA has signalled that cuts are not on the table near term, and a hike cannot be ruled out if inflation breadth persists. Serviceability settings remain tighter than pre2022 and refinancing windows should be used to lock sensible term structures rather than reach.

For investors, the macro mix still favours balance. The Fed's measured easing, the ECB's hold with inflation near target, and Japan's gradualism keep global financial conditions smoother than in early 2024, while Australia's underlying inflation and resilient housing argue for maintaining liquidity buffers and avoiding overconcentration in single asset classes.

For returning expats weighing property decisions, the rental market tightness and firm prices mean timing matters more than picking a policy inflection. With RBA guidance pointing to inflation above target for much of 2026 before returning toward the midpoint by late 2027, be wary of anchoring to earlycut narratives. Consider staged entry strategies and currency hedging if offshore cash is being deployed into AUD assets.

Looking ahead

The nearterm focus is straightforward. In Australia, the December monthly CPI and lateJanuary quarterly CPI will shape the RBA's February meeting, with most large institutions expecting a prolonged hold and a live risk skew if core momentum does not cool. In the US, markets lean toward a December cut with the Fed reiterating a meetingbymeeting posture. Europe and the UK are in timing mode rather than direction, and Japan will continue to remove accommodation slowly.

Bottom line for November: resilience continues, policy makers are easing off the brake without taking their eyes off the road. For clients, this is an environment that rewards calm focus; watch the data, stay nimble, and let policy do its job.