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CBA Economists Belinda Allen and Harry Ottley today published a note discussing the August RBA rates decision – below is an overview their analysis.

Key stats:

  • Interest rate: Cut to 3.60 per cent in August; another cut to 3.35 per cent is expected in November.
  • Economic growth: RBA forecast for 2025 downgraded to 1.7 per cent (from 2.1 per cent).
  • Unemployment: RBA expects steady unemployment at 4.3 per cent through 2027.

The Reserve Bank of Australia (RBA) cut interest rates for the third time this year at its August meeting, bringing the cash rate down to 3.60 per cent. The move was widely expected, as inflation continues to ease.

The RBA now expects the economy to grow more slowly than previously forecast, with GDP tipped to reach just 1.7 per cent by the end of 2025. That’s down from a 2.1 per cent forecast earlier this year.

“This is an RBA Board that appears comfortable with the current inflation outlook and the pace of easing,” said CBA Senior Economist Belinda Allen.

“We expect another rate cut in November to take the cash rate to 3.35 per cent as the RBA continues its gradual and cautious easing cycle.” 

Productivity downgrade reshapes outlook

The RBA has also revised down its expectations for productivity - a measure of how efficiently the economy works - now assuming just 0.7 per cent a year growth, down from 1 per cent. That means the economy’s potential growth is now seen at around 2 per cent, which has led to lower GDP forecasts.

Despite this, inflation is expected to stay within the RBA’s target range and unemployment is forecast to remain stable.

What to watch next

The next RBA meeting is scheduled for 29–30 September. Key data on wages and jobs, due this week, will help shape future decisions. CBA economists expect the next rate cut in November to take the cash rate to 3.35 per cent. Another rate cut in 2026 is possible if the jobs market weakens more than expected.

See the economists’ full report here.

Go to CBA Newsroom for the latest news and announcements from Commonwealth Bank.

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