Australia’s ongoing battle with inflation and interest rates continues to dominate the economic agenda. The Reserve Bank of Australia (RBA) has maintained its commitment to reducing inflation to target levels, resisting calls for premature rate cuts. However, 2025 may see the start of a cautious rate-cutting cycle.

External factors could complicate this outlook. An election year often brings increased government spending, which could fuel inflation and delay the potential for sustained rate reductions. Households struggling with mortgage stress and tightened budgets will likely face a drawn-out period of financial pressure, with consumer confidence and spending remaining under strain.