Quarterly economic update: October - December 2025

As we move through the end of the quarter, Australia’s financial landscape continues to be shaped by a combination of persistent inflationary pressures, higher interest rates, and ongoing global uncertainty. For households, investors, and businesses alike, the past few months have reinforced the importance of staying informed and taking a measured, long-term approach to financial decision-making.

The Reserve Bank of Australia (RBA) has remained firmly focused on inflation control, with interest rates staying higher for longer than many initially expected. While this has helped ease inflation gradually, it has also increased pressure on household budgets, particularly for mortgage holders and small business owners managing rising borrowing costs. Encouragingly, recent data suggests inflation is moderating, which may provide some relief later in the year if this trend continues.

Australia’s employment market has remained relatively resilient this quarter. While job growth has softened slightly, unemployment remains low by historical standards, supporting consumer confidence and spending. However, cost-of-living pressures are still being felt, prompting many households to reassess their budgets, savings habits, and financial priorities.

Investment markets experienced periods of volatility over the quarter, driven by shifting expectations around interest rates, economic growth, and global geopolitical events.

Australian equities reflected these fluctuations, with some sectors performing strongly while others faced headwinds. This has once again highlighted the importance of diversification and resisting the temptation to react to short-term market movements.