All bets are off: What are the odds of a Cup Day rate cut?

Sorry folks! The experts have placed their bets and it looks like Melbourne Cup Day won't be delivering a win for mortgage holders this year.

Economists are warning the Reserve Bank is likely to hold interest rates steady next week as inflation proves stickier than hoped.

According to Finder's latest RBA Cash Rate Survey, 86 per cent of experts (30 out of 35) expect the cash rate to remain at 3.60 per cent in November, with just a handful predicting a rate cut following last week's stronger-than-expected inflation data.

It's a sharp reversal from just a month ago, when nearly seven in ten economists had expected the RBA to start trimming rates by November.

"This time last month there was plenty of optimism for a rate cut in November, that's largely evaporated," said Graham Cooke, Finder's head of consumer research.

"The RBA wants to see inflation sit somewhere between two and three percent, and it just edged above the top threshold. The RBA will want to see that number trending down again before relieving any more cash rate pressure."

Chris Bates CEO of Alcove added: "There is already significant first home buyer and investor activity in the market, which is expected to increase after the 5 percent deposit scheme expansion on 1 October and with rates falling this year. However, this week's significant bounce in inflation has changed the likelihood of a rate cut next week to under just 5 per cent after it was as high as 70 per cent just a week earlier, when unemployment numbers also bounced much higher."

Inflation remains a headache

The trimmed mean Consumer Price Index (which removes extreme price swings to gauge underlying inflation) rose 3.0 per cent over the year to September, well above the RBA's previous forecast of 2.6 per cent.

Belinda Allen, Head of Australian Economics at Commonwealth Bank, said the result "will be a genuine concern" for the central bank.

"We expect the RBA to take a more hawkish tone to avoid a return to higher inflation," she said.

The Australian Bureau of Statistics reported that the CPI rose 1.3 per cent in the September quarter, the biggest quarterly rise since March 2023.

"The largest contributor to this quarterly movement was electricity costs, which rose by 9.0 per cent," said Michelle Marquardt, head of prices statistics at the ABS.

Economists say that surge, largely driven by the expiry of government energy rebates, was expected, but it still dents the case for an early rate cut.

When will the next cut come?

While most experts agree that rates are on hold for now, two-thirds (66 per cent) of those surveyed predict at least one cut within the next 12 months.

The timing, however, remains uncertain, the largest share (34 per cent) expect the next move to come in February 2026.

Adam Boyton Head of Australian Economics, ANZ supports this forecast. "February seems to be the first plausible month for that easing (which is where ANZ Research has moved the rate cut to)."

Luci Ellis, Chief Economist at Westpac, said the RBA would need to see inflation moving decisively back within its target range before acting.

"A trimmed mean reading of 3.0 per cent a year is too high for the RBA's comfort," Ellis said.

"The Monetary Policy Board will opt to be cautious and wait and see inflation approach closer to the midpoint of the target range before considering further cuts."

Alcove's Chris Bates believes that the RBA will likely pause, and with another decision again on 9 December, it is now more a question of whether they will hold again and wait until 18 February 2026.

"By this time, a lot of new information will come in to inform their decision on the trajectory of rates going into 2026, and the property market will have a few weeks of action to factor in."

Homeowners feeling the pressure

Finder's Consumer Sentiment Tracker shows the strain is real - more than one in three homeowners (36 per cent) struggled to pay their mortgage in October.

Despite that, most economists expect mortgage arrears to remain stable, with 68per cent predicting no change and just one in five expecting delinquencies to rise.

Cooke said while the RBA might not be offering relief, homeowners can still take steps to ease the pressure.

"Just because the RBA is unlikely to cut the cash rate this month doesn't mean you can't give yourself one," he said.

"Even trimming half a percentage point off your home loan could save you thousands of dollars a year.

A number of lenders are also offering cashback - up to $4,000 - for refinancing, which could be worthwhile for some borrowers looking for a cash injection."

Economists split but cautious

Among the minority expecting a rate cut is Jeffrey Sheen from Macquarie University, who argues the RBA should already be easing.

"The economy has for some time been close to its longer-run averages for inflation, GDP growth and unemployment," Sheen said.

"The September unemployment rate jumped to 4.5 per cent, and trimmed mean inflation was 2.7 per cent before rebounding slightly to 3.0 per cent.

Though the RBA Board will be concerned about mixed messages, I expect them to cut the cash rate by 25 basis points in November in recognition that downside risks dominate."

But most disagree, pointing to recent upticks in inflation and consumer spending as reasons for caution.

Michael Yardney, founder of Metropole Property Strategists, said inflation is "creeping up again and clearly not in control".

"While the RBA was surprised by September's jump in unemployment, the fact that inflation is creeping up again will mean the RBA keeps rates on hold," Yardney said.

Mathew Tiller of LJ Hooker Group added that while the jobs market is softening, "the Bank will want to see clearer progress before making its next move."

And in typical Aussie style, Scott Kuru of Freedom Property Investors summed up the national mood ahead of Cup Day: "Here's a sure Melbourne Cup Day bet; No RBA rate cut. But for those hoping that no November rate cut might slow the property market, think again."

CBA's internal spending data shows household outlays have been rising since March, supported by higher incomes and recovering property prices. That rebound has helped many businesses restore profit margins, especially in recreation and culture sectors, where prices jumped more than expected.

Still, with unemployment ticking up and inflation proving sticky, economists say the RBA will tread carefully.

AMP's Chief Economist Shane Oliver said: "The high reading for trimmed mean inflation will keep the RBA on hold in November, but higher unemployment and slower inflation will likely drive a cut next year."

The odds may not be in borrowers' favour this Cup Day, but economists agree the finish line for high rates is finally coming into view, just not as soon as many had hoped.

Until then, Australians are being urged to shop around for a better deal, keep an eye on cashbacks, and brace for a few more months of mortgage pressure before the long-awaited cut finally arrives.