> **来源：[研报客](https://pc.yanbaoke.cn)** # Rising inflation prompts market pivot to rate hikes # INFLATION EASES, BUT STILL HIGH The ABS's November monthly CPI data came in marginally below expectations, with annual headline inflation rising $3.4\%$ and trimmed mean inflation up $3.2\%$ . Services inflation remains sticky, while goods inflation fell due to Black Friday discounting. Energy rebates continued to add volatility to headline inflation. Although the RBA will focus on the upcoming Q4 inflation data, these figures confirm inflation remains above the RBA's target band. # RISE IN CASH RATE EXPECTATIONS The sharp rise in inflation in the October and November 2025 prints has triggered a turnaround in market expectations. Markets are now pricing in interest rate hikes in 2026, with a $25\%$ chance of a hike at the RBA's February meeting. The RBA's decision will hinge on Q4 inflation data, due later this month where it is expecting a trimmed mean inflation of $3.2\%$ . # AUD IS SLOWLY STRENGTHENING The AUD steadily appreciated against the USD throughout 2025, rising from US61 cents to US67 cents. This largely reflected a weakening of the USD as investors re-considered its status as a save haven and investors grew more concerned with US budget discipline. Looking ahead, the US Fed is forecast to cut interest rates while the RBA is expected to increase rates. If realised, this divergence will likely support a stronger AUD as Australian assets become more attractive to foreign investors. Higher global economic growth and commodity demand in 2026 may also support a higher AUD. Inflation tempers in November Annual change in monthly consumer price index $(\%)$ Market pricing indicates 1-2 rate hikes in 2026 AUD is slowly gaining strength Australia key forecasts <table><tr><td></td><td>Real GDP growth (Q3 2025, y/y %)</td><td>Unemployment rate (November 2025, %)</td><td>Core CPI inflation (November 2025, y/y %)</td><td>Cash rate target (November 2025, %)</td><td>10-year bond yield (31 December 2025, %)</td></tr><tr><td>Latest</td><td>2.1</td><td>4.3</td><td>3.2</td><td>3.60</td><td>4.8</td></tr><tr><td>Year-end 2026 (f)*</td><td>2.5</td><td>4.5</td><td>2.7</td><td>3.60</td><td>4.2</td></tr></table> # Business indicators Business confidence dips in response to shift in interest rate expectations PMIs fall in December Source: Knight Frank Research, Macrobond <table><tr><td rowspan="2"></td><td rowspan="2">Latest Dec-25</td><td colspan="3">Last quarter</td><td rowspan="2">1 year ago Dec-24</td></tr><tr><td>Sep-25</td><td>Jun-25</td><td>Mar-25</td></tr><tr><td>Australia</td><td>51.0</td><td>52.4</td><td>51.6</td><td>51.6</td><td>50.2</td></tr><tr><td>China</td><td>51.3</td><td>52.5</td><td>51.3</td><td>51.8</td><td>51.4</td></tr><tr><td>Euro Area</td><td>51.5</td><td>51.2</td><td>50.6</td><td>50.9</td><td>49.6</td></tr><tr><td>Japan</td><td>51.1</td><td>51.3</td><td>51.5</td><td>48.9</td><td>50.5</td></tr><tr><td>UK</td><td>51.4</td><td>50.1</td><td>52.0</td><td>51.5</td><td>50.4</td></tr><tr><td>US</td><td>52.7</td><td>53.9</td><td>52.9</td><td>53.5</td><td>55.4</td></tr></table> Unemployment rate remains stable Unemployment rate (trend adjusted) Source: Knight Frank Research, Macrobond <table><tr><td></td><td>Nov-25</td><td>Aug-25</td><td>May-25</td><td>Feb-25</td><td>Nov-24</td></tr><tr><td>Australia</td><td>4.3</td><td>4.3</td><td>4.2</td><td>4.0</td><td>4.0</td></tr><tr><td>NSW</td><td>4.1</td><td>4.2</td><td>4.1</td><td>4.0</td><td>3.9</td></tr><tr><td>Vic</td><td>4.7</td><td>4.6</td><td>4.4</td><td>4.4</td><td>4.5</td></tr><tr><td>Qld</td><td>4.2</td><td>4.2</td><td>4.1</td><td>4.0</td><td>3.9</td></tr><tr><td>WA</td><td>4.4</td><td>4.2</td><td>3.9</td><td>3.6</td><td>3.6</td></tr></table> Business confidence and conditions fall NAB survey, balance of positive and negative responses Source: Knight Frank Research, NAB, Macrobond Forward orders decline, but still trending up Forward orders index, balance of positive and negative Source: Knight Frank Research, NAB # Consumer indicators # Household spending continues to steadily improve Discretionary items drive spending growth Annual growth in household spending by type (%) <table><tr><td></td><td>Nov-25</td><td>Aug-25</td><td>May-25</td><td>Feb-25</td><td>Nov-24</td></tr><tr><td>Household spending, current prices (m/m)</td><td>1.0</td><td>0.1</td><td>1.1</td><td>0.2</td><td>0.5</td></tr><tr><td>Household spending, current prices (y/y)</td><td>6.3</td><td>4.8</td><td>4.5</td><td>3.5</td><td>2.9</td></tr></table> Consumer sentiment falls as rates outlook shifts Confidence index, value above 100 signal optimism Broad-based rise in household spending Annual growth in value of spending by category\* $(\%)$ Latest in Nov-25 <table><tr><td></td><td>m/m (%)</td><td>y/y (%)</td></tr><tr><td>Other</td><td>0.6</td><td>10.6</td></tr><tr><td>Recreation & Culture</td><td>1.7</td><td>8.6</td></tr><tr><td>Household Goods</td><td>2.2</td><td>8.2</td></tr><tr><td>Hotels, Cafes & Restaurants</td><td>1.2</td><td>7.5</td></tr><tr><td>Clothing & Footwear</td><td>2.0</td><td>7.4</td></tr><tr><td>Health</td><td>0.5</td><td>7.2</td></tr><tr><td>Food</td><td>0.7</td><td>7.2</td></tr><tr><td>Total</td><td>1.0</td><td>6.3</td></tr><tr><td>Transport</td><td>1.0</td><td>4.3</td></tr><tr><td>Alcohol & Tobacco</td><td>-1.8</td><td>-16.4</td></tr></table> WA and QLD drive household spending Annual growth in value of spending by state $(\%)$ # Inflation & interest rates Increased inflation risks have seen expectations shift towards rate hikes in 2026 Inflation rises sharply to above RBA target Annual growth in consumer price index (y/y %) Source: Knight Frank Research, ABS Note: Data transitions from quarterly to monthly in April 2025. <table><tr><td></td><td>Nov-25</td><td>Aug-25</td><td>May-25</td></tr><tr><td>Headline CPI (m/m sa, %)</td><td>0.2</td><td>0.2</td><td>0.0</td></tr><tr><td>Headline CPI (y/y sa, %)</td><td>3.5</td><td>3.2</td><td>2.1</td></tr><tr><td>Trimmed mean inflation (y/y, %)</td><td>3.2</td><td>3.0</td><td>3.0</td></tr></table> Recent uptick in global inflation weakens Headline CPI (y/y, %) Source: Knight Frank Research, Macrobond <table><tr><td></td><td>Nov-25</td><td>Aug-25</td><td>May-25</td><td>Feb-25</td><td>Nov-24</td></tr><tr><td>Australia (y/y, %)</td><td>3.4</td><td>3.2</td><td>2.1</td><td>2.4</td><td>2.4</td></tr><tr><td>US (y/y, %)</td><td>2.7</td><td>2.1</td><td>2.4</td><td>2.8</td><td>2.7</td></tr><tr><td>UK (y/y, %)</td><td>3.3</td><td>3.7</td><td>3.4</td><td>2.8</td><td>2.6</td></tr><tr><td>Euro area (y/y, %)</td><td>2.1</td><td>2.0</td><td>1.9</td><td>2.3</td><td>2.2</td></tr></table> Markets shift to expecting rate hikes Historic rates and indicative RBA outlook $(\%)$ Source: Knight Frank Research, NAB, Oxford Economics, ASX Yields rise with higher cash rates expected Yield by swap/bond duration $(\%)$ Source: Knight Frank Research, Macrobond <table><tr><td></td><td>Dec-25</td><td>Mar-26</td><td>Jun-26</td><td>Sep-26</td><td>Dec-26</td></tr><tr><td>Cash rate target</td><td>3.60</td><td></td><td></td><td></td><td></td></tr><tr><td>Oxford Economics</td><td></td><td>3.60</td><td>3.60</td><td>3.60</td><td>3.60</td></tr><tr><td>NAB</td><td></td><td>3.85</td><td>4.10</td><td>4.10</td><td>4.10</td></tr><tr><td>Market pricing</td><td></td><td>3.68</td><td>3.81</td><td>3.89</td><td>3.93</td></tr></table> Month-end <table><tr><td></td><td>Dec-25</td><td>Sep-25</td><td>Jun-25</td><td>Mar-25</td><td>Dec-24</td></tr><tr><td>2-year swap</td><td>4.27</td><td>3.61</td><td>3.47</td><td>3.73</td><td>3.90</td></tr><tr><td>5-year swap</td><td>4.47</td><td>3.80</td><td>3.66</td><td>4.00</td><td>4.11</td></tr><tr><td>10-year bond</td><td>4.74</td><td>4.29</td><td>4.19</td><td>4.41</td><td>4.34</td></tr></table> Monthly average # Financial markets # Global financial markets demonstrate stability in December Equities continue to push higher Global equities, price indices, 1 Jan 2024 = 100 Source: Knight Frank Research, Macrobond <table><tr><td rowspan="2"></td><td colspan="4">Percentage change from</td></tr><tr><td>Sep-25</td><td>Jun-25</td><td>Mar-25</td><td>Dec-24</td></tr><tr><td>ASX 200</td><td>-2.0</td><td>1.5</td><td>8.9</td><td>4.2</td></tr><tr><td>S&P 500</td><td>4.2</td><td>13.8</td><td>20.6</td><td>14.0</td></tr><tr><td>Nasdaq</td><td>5.6</td><td>18.9</td><td>31.2</td><td>18.4</td></tr><tr><td>Euro STOXX 50</td><td>5.6</td><td>7.6</td><td>8.2</td><td>19.3</td></tr><tr><td>FTSE 350</td><td>5.5</td><td>10.2</td><td>12.6</td><td>17.3</td></tr></table> Monthly average Market volatility falls to lowest level in a year US VIX index - measure of market volatility (Index) Source: Knight Frank Research, Macrobond Gold prices remain elevated in December US$ Source: Knight Frank Research, Macrobond <table><tr><td rowspan="2">Index</td><td rowspan="2">Latest Nov-25</td><td colspan="4">Percentage change from</td></tr><tr><td>Aug-25</td><td>May-25</td><td>Feb-25</td><td>Nov-24</td></tr><tr><td>Gold</td><td>4,219</td><td>22.4</td><td>28.2</td><td>47.6</td><td>59.2</td></tr><tr><td>LNG</td><td>11.1</td><td>-3.9</td><td>-5.2</td><td>-24.8</td><td>-21.1</td></tr><tr><td>Mentholeverage</td><td>106.2</td><td>2.9</td><td>5.9</td><td>-1.8</td><td>2.2</td></tr></table> AUD is slowly gaining strength AUD vs USD (LHS) and trade-weighted index (RHS) Source: Knight Frank Research, Macrobond <table><tr><td rowspan="2"></td><td colspan="5">Latest</td></tr><tr><td>Dec-25</td><td>Sep-25</td><td>Jun-25</td><td>Mar-25</td><td>Dec-24</td></tr><tr><td>USD per AUD</td><td>0.66</td><td>0.66</td><td>0.65</td><td>0.63</td><td>0.63</td></tr><tr><td colspan="6">Percentage change from</td></tr><tr><td>Trade weighted index</td><td>62.0</td><td>1.5</td><td>3.3</td><td>3.7</td><td>2.6</td></tr></table> Monthly average Recent research We like questions, if you've got one about our research, or would like some property advice, we would like to hear from you. You can also subscribe to our research. Alistair Read Senior Economist +61450831899 Alistair.Read@au.knightfrank.com Ben Burston Chief Economist +61290366756 Ben.Burston@au.knightfrank.com