After tracking most of 2025 in a 4-4.3% bank, unemployment spiked today to hit a 4 year high. The September labour force data jumped to 4.5%, injecting fresh uncertainty into the RBA’s policy outlook. While employment rose (+14,900) it was below consensus estimates for +20,000. RBA Governor Bullock said that policy is "marginally tight", which markets interpret as one more interest rate cut for the cycle.

Policymakers face a difficult balance at their upcoming November meeting. On one hand the labour market is showing signs of softening; on the other, inflation risks remain front and centre. Economists believe inflation (particularly from services) will dominate decisions, and that the RBA will opt to hold in November. Only a soft Q3 CPI release later this month will change this view.