The Australian economy stands at a crucial turning point heading into 2026, with economists warning that a mix of domestic and international forces could swiftly reshape the nation’s outlook. Despite ongoing uncertainty, Commonwealth Bank of Australia (CBA) economists are forecasting one final interest rate cut by the Reserve Bank of Australia (RBA) early in the new year. “The Australian economy is at an important juncture,” said CBA Chief Economist Luke Yeaman. According to the latest CommBank View report, a comprehensive analysis of global and domestic economic trends,signs of renewed momentum are emerging. Private sector activity is rebounding, consumer confidence is climbing, and house prices are once again on the rise, pointing to a stronger short-term outlook. However, economists caution that the recovery remains finely balanced. Inflationary pressures have resurfaced, job growth has moderated, and wage gains are showing signs of easing. At the same time, global uncertainty — from geopolitical tensions to commodity market fluctuations — continues to cloud the broader economic picture. CBA’s analysts suggest that Australia’s economy is likely to “steer a middle path” through these competing dynamics, navigating cautiously between the risks of renewed inflation and the need to sustain growth.

Source: CBA

Commonwealth Bank of Australia | Media Release 176/2025