Australian Bond Exchange Weekly Update
3rd October 2025
Key Points
- Australia: The RBA left the cash rate unchanged at 3.60% p.a.. Monthly CPI gained 3.0% (YoY) for August, while the Trimmed Mean estimate was 2.6% (YoY), excluding the annual rise in electricity and other large price movements.
- United States: The Federal Reserve cut its target cash rate by 0.25% to 4.00%–4.25% p.a. August headline inflation rose to 2.9% (YoY) from 2.7% in July, while Producer Price Inflation fell 0.1% (MoM). US private payrolls dropped by 32,000 in September, reversing August’s +51,000 gain.
- United Kingdom: The BoE held interest rates steady at 4.00% p.a. August inflation eased to 3.6% (YoY), down from 3.8% in July.
- Eurozone: The ECB maintained its deposit rate at 2.0% p.a. September inflation rose to 2.2% (YoY), up from 2.0% in August.
Market Insights
- Current Investment Opportunities
- RBA holds cash rate at 3.60%.
- US private payrolls decline in September.
- Eurozone CPI edges up to 2.2%.
RBA Holds Cash Rate at 3.60%
The RBA kept the official cash rate at 3.60% p.a., following three cuts earlier in 2025 (February, May, and August). Policymakers maintained a cautious “wait-and-see” stance, with future decisions dependent on upcoming inflation, wage, and labor market data. Governor Michele Bullock highlighted that while inflation is easing overall, it remains “sticky” in areas such as services and housing-related costs. She also noted that the full impact of earlier rate cuts may still flow through the economy.
US Private Payrolls Fall in September
US private sector employment declined by 32,000 in September, according to ADP data, sharply missing expectations for a 54,000 gain and reversing August’s +51,000 increase. While part of the weakness was due to methodological adjustments linked to government data, the broader trend suggests cautious hiring and slowing job growth.
Wage growth also moderated: job changers saw a 6.6% (YoY) increase, the lowest in a year, while job stayers held steady at 4.5% (YoY). ADP’s chief economist, Nela Richardson, noted that employers remain hesitant amid economic uncertainty.
At the policy level, the Fed cut its target cash rate to 4.00%–4.25% p.a. Inflation rose slightly to 2.9% YoY, while producer prices fell modestly, signaling a measured approach to easing.
Eurozone CPI Rises Slightly to 2.2%
Eurozone headline inflation rose to 2.2% (YoY) in September, up from 2.0% in August. Core inflation held steady at 2.3% (YoY), while services inflation closely tracked by policymakers accelerated to 3.2% (YoY), pointing to persistent domestic price pressures.
Despite the uptick, the ECB is not expected to adjust policy in the near term. President Christine Lagarde reiterated that inflation risks remain “quite contained,” reinforcing the higher-for-longer policy stance and delaying expectations for near-term rate cuts.
Current Investment Opportunities
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*Data accurate as at 03.10.2025
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