After three years of struggle, Australia is finally seeing a turning point. The Reserve Bank is sending positive signals, the Australian dollar has staged a strong rebound, and the government is boosting welfare support—bringing fresh hope to millions of households.

#01: RBA Delivers Major Good News—Australia’s Tough Battle Is Coming to an End

After nearly three years under the shadow of high inflation, Australia is finally seeing light at the end of the tunnel. RBA Chief Economist Sarah Hunter recently sent out a strong signal: Australians are about to win this hard-fought battle. Hunter stated that the economy is now approaching its ideal state—low inflation combined with stable employment. Inflation is now within touching distance of the RBA’s 2–3% target range, while unemployment remains around 4.2%, near full employment levels. Most importantly, households are finally seeing some long-awaited breathing space.

Hunter revealed that average wage growth has now outpaced price increases, meaning purchasing power is being restored. Alongside this, Stage Three tax cuts introduced last year and three rate cuts have together eased the cost-of-living squeeze for many families. She was direct: “We believe the worst period households have gone through in recent years is behind us. The fundamentals are improving, and people are reaching a new balance point.”

This long battle began in 2022, when global energy prices soared, consumer demand rebounded after the pandemic, and inflation surged out of control—peaking near 8% at the end of that year, the highest in decades. To contain it, the RBA embarked on its most aggressive rate-hiking cycle in modern history, lifting the cash rate 13 times between May 2022 and November 2023. Families with mortgages struggled to cope under the dual pressure of high inflation and high interest rates.

But by 2024, inflation began easing. The RBA responded with three rate cuts, lowering the cash rate to 3.6%. Markets now expect one or two more cuts by mid-2026, further easing debt burdens and boosting business and consumer confidence. Still, Hunter warned against complacency. The central bank remains cautious about risks of inflation either rebounding or falling too far below target, which could weaken the economy and labor market. For now, however, Australian households are finally seeing hope: stronger wage growth, tax relief, and lower mortgage rates are all easing the pain. In recent months, the Australian dollar has also staged an impressive comeback.

#02: AUD Stages Strong Rebound—One of the Best Performers in the G10

The Australian dollar has had a volatile ride in 2025. After being dragged down earlier in the year by market turmoil triggered by U.S. President Trump’s tariff announcements, it has staged a remarkable recovery. Since hitting a low in early April, the AUD has risen nearly 12%, making it one of the strongest-performing G10 currencies.

The rebound reflects both U.S. dollar weakness and Australia’s unique economic and commodity-market strengths. While the AUD eased slightly today—falling to 4.7461 against the RMB and 0.6675 against the USD—it remains near multi-month highs. Importantly, the rally has broadened: in September, the AUD not only strengthened against the USD but also appreciated against almost every other G10 currency except the Norwegian krone.

Markets expect the U.S. Federal Reserve to cut rates by 150 basis points over the next 18 months, taking the federal funds rate back toward 3%, removing much of the dollar’s yield advantage. By contrast, Australia, the UK, and Canada have limited room to cut further, while Europe’s easing cycle is also nearing its end. This shift has given the AUD a strong relative position.

Commodities have also played a key role. Iron ore remains steady above USD 105 per tonne, supported by Chinese steel output and tight global supply. Gold has hit record highs, boosting demand for the AUD as a commodity-linked currency. Meanwhile, a stronger RMB has attracted capital flows back into emerging markets, lifting broader risk appetite—and with it, the AUD.

Speculative short positions against the AUD were previously near historic highs. As the currency broke out, short covering further fueled its rally. Analysts at NAB and AMP Capital note that robust commodity prices, China’s recovery, and solid Q2 economic data provide investors with plenty of reasons to stay bullish. Some economists argue the AUD remains undervalued and could rise toward USD 0.73 in the months ahead.

That said, global risks remain. Fiscal concerns weigh on European currencies, the Canadian dollar is softening ahead of expected rate cuts, and the yen is under pressure from political uncertainty. While these conditions highlight the AUD’s relative strength for now, a sharp reversal in global risk sentiment could still see investors pull back from the currency.

#03: Australian Government Boosts Welfare—Five Million People to Benefit

Adding to the good news, the Australian government has confirmed that from this Friday (September 20), millions of people receiving pensions, rental assistance, single-parent payments, or unemployment benefits will see an increase in their income. The adjustment, which will benefit about 5 million people, is designed to help households cope with cost-of-living pressures.

According to the Department of Human Services, the increases include:

Age Pension: Single pensioners will receive an extra AUD 29.70 per fortnight, bringing the total to AUD 1,178.70. Couples will see an increase of AUD 22.40 each, raising payments to AUD 888.50 per fortnight.

Parenting Payment: Single parents will get an extra AUD 16.20 per fortnight, totaling AUD 1,039.70, while partnered parents will receive AUD 11.40 more, taking their payment to AUD 734.40.

Rent Assistance: Singles will see an increase of AUD 3.40 to AUD 215.40, couples will receive AUD 3.20 more to AUD 203, and single parents with three or more children will get an additional AUD 4.48, raising support to AUD 286.02.

JobSeeker: For singles aged 22 or over without children, the benefit will rise by AUD 12.50 per fortnight, bringing the total to AUD 793.60.

Australia’s welfare system is designed to ensure benefits are indexed to inflation, preventing them from being eroded by rising prices. While the increases may seem modest, they will make a tangible difference for households on fixed incomes.

Conclusion

From easing inflation and a rebounding currency to higher welfare payments, Australia’s economy is gradually moving toward a new equilibrium. Challenges remain, but the worst appears to be behind, confidence is returning, and for many Australians, the good times are finally on the horizon.