Australia Interest Rate Forecast 2025 – What Borrowers Need to Know Now
- Future Accounting
- Jun 12
- 3 min read
Updated: Aug 13
How the Australia interest rate forecast 2025 could impact your loans and investments
As of June 2025, the official cash rate in Australia is set at 3.85%.
With economic growth showing signs of slowing, analysts expect the RBA to make adjustments in the coming months.
Here’s a look at what we can expect from the central bank’s rate decisions in 2025.
Interest Rate Cuts Expected in the Coming Months
The RBA’s recent economic statements have hinted at the possibility of rate cuts and here’s why:
Weak Economic Growth: Australian economic growth has been slow. GDP in the quarter to March 2025 rose only 0.2%. Annually, growth is at 1.3%. That’s certainly slower than anticipated and indications of the economy failing to find much momentum.
Inflation Easing: Australia’s annual inflation rate has cooled to 2.9%, coming back within the RBA’s target range of 2–3%. This gives the central bank room to adjust interest rates without stoking inflationary concerns.
Rate Cut Forecasts
Looking ahead, financial experts predict that the RBA will cut the cash rate at least twice before the end of 2025:
July 2025: A 25 basis point cut is in the cards, putting the cash rate at 3.60%. Financial markets are assigning this a very solid 70–80% probability.
August 2025: Another cut of 25 basis points is likely, taking the rate down to 3.35%.
November 2025: We could potentially have another cut, to 3.10%. It’s not a given, but certainly on the table.
Early 2026: Most forecasts suggest the cash rate will settle around 3.10%. Some analysts even see room for it to dip as low as 2.85%, but that’s a bit more optimistic.
Why is the RBA Making These Moves?
The RBA’s decisions are driven by several economic factors:
Weak GDP Growth: Low GDP growth rate is of greatest concern to the RBA, and interest rate cuts may be employed to support economic demand by curtailing the cost of lending.
Inflation Control: Even though inflation has come down, the RBA does not wish to let inflation surge upward again too fast. Lowering rates, the central bank looks to stimulate consumer demand and investment without triggering inflationary forces again.
Global Risks: Overseas economic fluctuations, such as foreign market changes and foreign trade policies, are prompting the RBA to be future oriented and cautious with rate cuts to protect the economy of Australia.
Reserve Bank of Australia Meeting Schedule
Australia’s RBA meets eight times during 2025 to discuss and make changes to monetary policy. Key meeting dates are:
Monetary policy meeting on Jul 8 at 2:30 pm AEST
Interest rate decision on Aug 12 at 2:30 pm AEST
Monetary policy meeting on Sep 30 at 2:30 pm AEST
Monetary policy decision on Nov 4 at 2:30 pm AEDT
Interest rate move on Dec 9 at 2:30 pm AEDT
Conclusion
Australia interest rate forecast 2025 reveals a phase of rate reductions, with the RBA reacting to slow economic growth and softening inflation. These are likely to give a boost to the economy by spurring spending and investment.
If you're in the midst of planning your future financially, these cuts in rates may prove an opportunity, but do keep yourself informed about the RBA’s releases, as they are going to keep influencing the economic climate throughout 2025.
Be sure to mark the RBA’s key meeting dates and keep an eye on the central bank's decisions as they unfold!
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Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
