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Hopes of a Melbourne Cup win for borrowers have faded with hotter than expected inflation numbers all but ruling out a rate cut next Tuesday. Markets are pricing the chances of a cut at just 9 per cent. Australian Bureau of Statistics data shows annual headline inflation, in the three months to September, was 3.2 per cent after the fastest quarterly rise in more than two years. While underlying, or core, inflation was 3 per cent. That means inflation is no longer comfortably within the Reserve Bank's target band of between 2 and 3 per cent. Economists say it closes the door for the Reserve Bank to cut interest rates on Melbourne Cup Day. Indeed's senior economist APAC Callam Pickering was one economist arguing for a rate cut in November on account of a deteriorating employment market, but the inflation data has put that view on hold for now. However, he says the jobs market will be something the RBA watches as we head into next year. "Employment growth has slowed over the course of 2025 and the increase in the unemployment rate in September was the culmination of that slow down... If the recent employment data that we've been seeing over the past say 6 to 9 months continues then we could very well have an unemployment rate pushing 4.7 per cent by the end of this year and certainly it could go higher next year as well," he said. He expects that the RBA will next cut rates in May 2026. The share market finished the week lower following the strong inflation numbers. The program also looks at what came out of Donald Trump's meeting with the Chinese President Xi Jinping in South Korea and Australian defence exports, which have skyrocketed since Russia invaded Ukraine. Close of Business is presented by Alicia Barry.
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