In June 2025, Australia’s private sector credit rose by 0.6% compared to the previous month, beating the expected 0.5% increase. In May, credit had also increased by 0.5%. Over the year, private sector credit grew by 6.8%, which is a slight decrease from the previous 6.9%. Business credit dipped a bit month-over-month, while housing and personal credit both went up.

Reserve Bank Of Australia Data

The Reserve Bank of Australia released this data. They also noted that recent CPI data was well-received. As of today, July 31, 2025, the better-than-expected private sector credit data shows the economy is still strong. The 0.6% monthly increase, fueled by housing and personal loans, indicates strong consumer demand. This typically suggests that the Reserve Bank of Australia (RBA) might keep a hawkish stance. However, we need to consider the RBA’s recent comments. Deputy Governor Hauser called the latest CPI data “very welcome,” which signals a dovish approach. This means the central bank is more focused on easing inflation rather than the positive credit numbers. This situation is reminiscent of late 2023, when the RBA kept its cash rate at 4.35% while monitoring falling inflation. Recent data showed that the CPI for Q2 2025 eased to 3.4%, suggesting that the bank’s strict policies are working. Therefore, traders should view this credit data as less important for the RBA’s immediate decisions.

Market Implications

For interest rate derivatives, the chances of a rate hike in August are very low. We believe traders should prepare for an extended pause, with expectations for RBA rate cuts likely moving to early 2026. This is supported by rising prices in ASX 30 Day Interbank Cash Rate Futures for December 2025 and March 2026 contracts. This likely limits the strength of the Australian dollar. With the RBA appearing less aggressive than the US Federal Reserve, the interest rate edge for the AUD is diminishing. Options traders might look for strategies that hedge against or take advantage of potential AUD weakness against the USD in the coming weeks. Given the mixed signals from strong credit growth and dovish central bank talk, we expect implied volatility to stay high. This market environment isn’t about making clear predictions but rather managing fluctuations in prices. Traders may want to consider strategies that thrive in range-bound markets until the RBA offers clearer guidance. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now