Bendigo Bank October 2026 Economic Update

Following the Reserve Bank of Australia’s (RBA) decision to lift the official cash rate to 4.6% - its highest level since 2011 and fourth rate rise in eight months - it is predicted that the central bank will now pause any changes to the cash rate for this calendar year.

“Elevated global oil prices and record diesel costs, coupled with tight labour market conditions, elevated government spending and low productivity growth, prompted the central bank to raise rates to encourage a lowering of the inflation rate in Australia and steer CPI back below 3% next year,” said David Robertson, Chief Economist for Bendigo Bank.

“Recent economic indicators have highlighted a growing strain on family budgets across Australia, with household spending remaining flat, the ending of the temporary fuel excise relief in August driving transport costs higher and softening residential property prices.

“These factors have all contributed to a decline in consumer sentiment, with the October survey recording an additional 5% drop in consumer confidence, leaving sentiment down more than 12% compared to twelve months ago.”

While higher rates and persistent cost-of-living pressures are putting real pressure on households, the sharp fall in consumer confidence and stalling retail spending is clear evidence that demand is now softening.

"Unfortunately, borrowers should not anticipate rapid easing in the near term, and we continue to forecast a longer and more drawn-out policy cycle as these unique global conditions persist, including the global technology investment boom where the private sector is going head-to-head with governments competing for labour and capital,” Mr Robertson said.

“The Aussie dollar is back below 70 US cents as expectations of higher interest rates in the United States grows for 2027, but stock markets continue to shake off the challenges of higher oil prices, official rates and bond yields, with fresh record highs for stock indices implying confidence around the expected payoff of relentless technology investment into productivity, output and wealth ahead.

“Unless upcoming employment or inflation data deliver major surprises, we anticipate the cash rate will remain on hold at 4.6% through November and December as we see more signs that demand in the economy is moderating, however there will need to be a lot more progress with inflation before rates can be lowered.”