Back in September 2023, I posted a blog on how inflation comes in waves.

Today, that blog is suddenly a lot more relevant.

It was a warning not to get too excited about U.S. rate cuts, but the same applies here in Australia, and current conditions are proving why.

What do I mean?

Here in Australia, the RBA’s latest messaging has shaken the conversation and unsettled the doves (those hoping for a swift pivot).

In its November comms, the RBA made clear that underlying inflation isn’t as benign as hoped. RBA Governor Michele Bullock noted it’s “possible there’s no more rate cuts… we might not have to come down as far as other economies.” Asked about hikes, she replied simply: “anything’s possible.”

This guidance removes any sense of commitment to further cuts and leaves all outcomes on the table.

Analysts are now flagging that the next move could be up, not down.

Still, forecasts are split. Some economists see the cash rate holding at 3.6 % for a while, while others see a 2026 hike as a real possibility, if inflation surprises again.

Overall, the path to easing has narrowed, and is entirely hostage to the upcoming inflation data.

But back to my September 2023 blog and the reality that inflation rarely moves in a straight line. In Australia, until recently, energy subsidies had been muting non-tradable inflation (home-grown prices). But those supports are gone.

Electricity prices surged 37.1 % over the 12 months to October 2025 as rebates ended, making power bills a headline act in the cost-of-living show.

Additionally, housing costs continue climbing, with a 5.9 % inflationary print in the year to October 2025, driven by rents, energy, and building costs.

So, before you start positioning in fixed-rate bonds thinking the top of the rate cycle is here, remember that structurally higher inflation is still a possibility, and so are higher interest rates. Assign your probabilities!

For a refresher on how inflation comes in waves, click here to go to our September 2013 blog “Will inflation come in waves?”

Surf’s up!

Mike

Think the RBA’s done with rates? the next move could surprise.