The September quarter delivered a sturdier backdrop than the headlines suggested. Across major economies, central banks leaned into support, inflation generally drifted toward targets, and the world stage, while noisy, did not derail the macro trajectory. The tone through Q3 was one of measured progress, policy became a little easier, growth held up, and resilience kept showing through.
In the US, the Federal Reserve cut rates by 0.25 percentage points in September, taking the funds rate to 4 to 4.25 percent. Chair Powell framed the move as risk management, responding to softer labor momentum while inflation stays above target, rather than a sign of panic. The Fed kept its options open for further easing, with projections hinting at additional cuts if the data warrant it. Markets took comfort in the steady hand and the message that the Fed will remain data driven.
Inflation prints through the quarter supported that approach. August CPI landed at 2.9 percent year on year, with core at 3.1 percent, consistent with sticky but moderating underlying pressures. It was not a game changer, but it fit the pattern of disinflation with bumps along the way. Europe stayed patient. The European Central Bank held rates steady, noting inflation near its 2 percent medium term aim and an economy that continues to grow despite trade tensions. The Bank of England also paused, leaving Bank Rate at 4 percent as inflation held at 3.8 percent, still above target but trending in the right direction. Japan’s story was one of cautious normalization. The Bank of Japan kept its policy rate at 0.5 percent but signalled a gradual exit from extraordinary stimulus.
China’s picture remained mixed through the quarter. Manufacturing showed signs of stabilization while services cooled, and late quarter commodity policy noise, including headlines around iron ore purchase restrictions, looked more tactical than structural. The mutual reliance between China and commodity suppliers like Australia tends to encourage pragmatic outcomes.
Back home, the Reserve Bank of Australia held the cash rate at 3.6 percent in late September, striking a watchful tone. The RBA emphasized that incoming data, particularly the September quarter CPI, would guide decisions, a stance that kept November live while avoiding any rush. At that point, markets were still pricing in a modest chance of a cut.
Then came the October surprise. The September quarter CPI, released at the end of October, showed headline inflation jumping to 3.2 percent year on year, with trimmed mean inflation rising to 3.0 percent, above the RBA’s forecast. The spike was driven largely by electricity costs as rebates rolled off, alongside sticky services prices. While this does not signal runaway inflation, it does mean the RBA will hold steady in November and reassess its easing path. Most economists now expect any rate cuts to be pushed into 2026, once temporary factors fade and underlying pressures ease.
The external account told a similar “volatile but intact” story. August’s goods trade surplus narrowed sharply to A$1.8 billion as non-monetary gold exports dropped after outsized gains in July. Labor side signals stayed constructive, wages growth eased from its peak but remains supportive of household incomes, and employment is cooling gradually rather than collapsing.
Put together, Q3 showed a global economy that is adapting rather than stalling. The Fed’s measured pivot, the ECB’s and BoE’s patience, Japan’s gentle normalization, and Australia’s data dependent stance all point to a common thread, policymakers are easing off the brake, but they are not taking their eyes off the road. That balance is exactly what markets needed through the seasonally tricky August and September
stretch, and it helps explain why risk sentiment held up.
Looking ahead, the near-term focus is straightforward. In the US, the path of rate cuts will hinge on inflation and jobs data. In Europe and the UK, the question is timing rather than direction. In Japan, normalization will remain slow. And in Australia, the RBA’s November decision is now clear, hold steady, with updated forecasts signalling caution. If the recent pattern holds, moderating global inflation, steady employment, and pragmatic policy, there is room for optimism without complacency.
The quarter ended with foundations that look solid, even with October’s inflation surprise. Central banks are smoothing the path, growth is proving resilient, and the world stage, though lively, has not knocked the recovery off course. It is an environment that rewards calm focus, watch the data, stay nimble and let policy do its job. If you have any questions or want to discuss how the team at Atlas Wealth Group can help you with your Tax, Financial Planning and Mortgages needs, feel free to reach out at australia@atlaswealth.com or alternatively learn more about us at www.atlaswealth.com.
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