Inflation in Australia is showing clearer signs of easing, but the conversation has not shifted to relief just yet. New figures from the Australian Bureau of Statistics indicate that year-on-year inflation slowed to 3.4% in November, improving on October’s 3.8%. The trimmed mean measure, which removes unusually volatile price movements to give a cleaner view of underlying pressures, also edged lower, easing to 3.2% from 3.3%.
For households, that small step down matters, because it lands right in the territory that markets and lenders watch closely ahead of the Reserve Bank of Australia’s next decision. The headline number suggests price growth is losing momentum, yet the broader question remains unsettled: has inflation cooled enough to convince policymakers to pause, or is another rise still a realistic prospect?
That uncertainty is being reinforced by signals coming from some of the country’s largest banks. Even as the data points to moderation, major lenders are still entertaining the possibility that borrowing costs may climb again, leaving mortgage holders stuck between improving inflation prints and a rate outlook that refuses to fully relax.
Banks brace for possible tightening
In mid-December, the Commonwealth Bank of Australia set out an expectation that the cash rate could rise by 25 basis points, with its forecast placing the rate at 3.85% following the Reserve Bank of Australia board meeting scheduled for February. It is a measured call, but it keeps the door open to another step higher after the latest inflation update.
National Australia Bank, meanwhile, struck a more forceful note. NAB said it was anticipating a stronger tightening cycle, projecting two increases—one in February and another in May—that would lift the cash rate to 4.1%. The difference between the two outlooks underlines how difficult the next phase may be to read: the inflation trend is improving, but expectations about what the RBA will do with that information still vary sharply.
This split matters because bank forecasts shape borrower psychology as much as they track the data. Many households plan their budgets around the “what if” rather than the “what is,” especially after a period where rate changes have arrived quickly. With competing predictions circulating, the atmosphere becomes one of preparation rather than certainty, even when inflation moves in the right direction.
A narrow window for borrowers
Economists are still divided on whether the November figures will prove persuasive enough to stop further rises. Oxford Economics Australia head of economic research and global trade Harry Murphy Cruise argued the latest data should be sufficient to keep rates on hold, pointing to the trimmed mean result as a critical threshold.
“That data lands at the end of the month, with 3.2% being the magic number for trimmed mean inflation. Anything above that will warrant a hike when the RBA board next meets in early February. Anything at or below should be enough for the board to hold rates steady. We expect the latter, sparing mortgage holders an unwelcome hike to start the year,” he said.
But other voices are warning against complacency. Canstar cautioned that an increase is still possible, describing a rate rise as “by no means off the cards.” Data insights director Sally Tindall urged borrowers not to wait for the decision before stress-testing their finances.
“The possibility of a rate hike is still very much a live one and borrowers should take the time to get ahead of the game while they can. Work out what your repayments would look like if the cash rate rises and make sure your budget can handle it,” she said.
The potential household impact is straightforward, even if the policy path isn’t. A 0.25% rise would add roughly $90 a month in repayments on a $600,000 loan, and about $150 a month on a $1 million loan. In a moment where inflation is easing but not yet settled, the difference between “pause” and “one more hike” is not abstract—it shows up in monthly cash flow, and in how confidently borrowers can plan for the months ahead.
