Post-Election 2025: How the New Government Will Impact Your Finances
Chloe Jones
Published on 3rd September 2025

Australia’s Economic Outlook in 2025: Inflation, Interest Rates, and Credit Regulation

Key Takeaways

  • Economic growth remains sluggish, with inflation above target and household budgets under strain.

  • The RBA signals a “higher-for-longer” stance, keeping interest rates elevated for stability.

  • Stronger consumer credit regulations will reshape short-term lending and increase borrower protections.


The dust has settled on the May 2025 federal election, which saw the Albanese Labor Government secure a new term. For Australian households, the focus now shifts from political promises to policy reality.

With a challenging economic landscape of high inflation and slow growth, the government's decisions over the next term—along with the independent actions of the Reserve Bank of Australia (RBA)—will directly influence your mortgage, savings, and access to credit. Here’s what you need to know.

The Economic Inheritance: An Updated Snapshot 📈

The government's primary challenge is navigating what has been the longest period of low economic growth since the early 1990s, coupled with persistent high inflation. This environment has squeezed household budgets and put pressure on businesses, which have seen profitability decline due to rising costs.

While some budget figures have been better than expected, the overall picture is one of caution. The first round of post-election economic data has reinforced these concerns:

Economic Growth (GDP): Growth is slow, with Treasury forecasts sitting around 2.25% for the 2025-26 fiscal year. The latest quarterly figures confirmed this sluggishness, showing the economy grew by only 0.2% in the June quarter.

Inflation (CPI): Inflation remains the key concern. As of mid-2025, the headline inflation rate is approximately 3.5%, still well above the RBA's 2-3% target. The most recent quarterly CPI data showed inflation only eased slightly, disappointing hopes for a faster decline and suggesting price pressures are stickier than anticipated.

Federal Budget: The 2025-26 budget forecasts a deficit of $42.8 billion, reflecting the government's strategy of balancing cost-of-living support with long-term fiscal repair.

The RBA's Stance: A Reinforced "Higher-for-Longer" Message

It’s crucial to remember that the Reserve Bank of Australia (RBA) operates independently of the government. Its decisions on the official cash rate are driven by economic data, not politics.

As of August 2025, the RBA cash rate is 4.35%. In its meetings since the election, the RBA board has voted to hold the rate steady, prioritising its goal of bringing inflation back down to the target range. In its recent statements, the RBA has adopted a more hawkish tone, noting the persistence of services inflation and signaling that rates will need to remain at restrictive levels for some time. Until there is clear evidence that inflation is under control, homeowners should not expect relief from high mortgage repayments.

Key Policy Directions: From Promises to Progress

The re-elected government's policies will have a tangible impact on several key areas of your financial life. In the first quarter, we've seen the initial steps to turn election promises into concrete legislation.

Housing Market and Affordability 🏡

Housing affordability was a central election issue, and the government is continuing its multi-faceted approach. The May 2025 budget included significant investments aimed at easing pressure:

Housing Supply: An allocation of funds for infrastructure to support the development of new homes.

Social and Affordable Housing: Billions invested to increase the availability of social and affordable rental options.

Home Ownership: Continued support for programs like the Help to Buy shared equity scheme. Draft legislation for this scheme has now been released for consultation, providing more detail on eligibility criteria and the application process.

While these measures aim to improve accessibility long-term, the immediate cost of a mortgage remains tied to the RBA's high interest rates.

Consumer Credit and Short-Term Loans

The government's re-election signals a continued move toward stronger regulation in the consumer credit space. This is most evident in its recent decision to bring Buy Now, Pay Later (BNPL) services under the National Consumer Credit Protection Act. Treasury has since released a consultation paper outlining the proposed regulatory framework, indicating the changes could be implemented as early as 2026.

While BNPL isn’t the same as a payday loan, the move reflects a broader policy of tightening oversight on low-value, high-cost lending products. This policy direction is further supported by direct regulatory action, as ASIC has also increased its scrutiny of payday lenders, warning some providers about potential breaches of consumer credit laws.

Deeper Dive: What Tighter Regulation Actually Means

This government focus on consumer protection will have tangible effects on the short-term loan market.

For Borrowers 👥

For Australians seeking short-term loans, "harder to access" will likely mean:

More Rigorous Affordability Checks: Lenders will be required to dig deeper into your income and expenses to ensure you can genuinely afford repayments without falling into hardship.

Potentially Lower Loan Amounts: Some borrowers may find they are approved for smaller amounts than they might have been previously.

Greater Protection: The upside is a stronger safety net. Tighter rules are designed to protect vulnerable consumers from predatory lending practices and prevent cycles of debt.

For Lenders 🏦

The heightened regulatory environment presents both a challenge and an opportunity. Lenders will face:

Increased Compliance Costs: More robust systems and processes will be needed to meet the stricter legal requirements.

Higher Penalties for Breaches: ASIC is signaling less tolerance for lenders who fail to meet their responsible lending obligations.

A Shift in the Market: We may see a consolidation in the industry, with smaller players who can't meet the new standards exiting the market.

Ultimately, the lenders who thrive will be those who fully align with responsible lending standards and prioritise customer well-being, as this is now essential for operating under the government's tighter policy.

About the author
Chloe Jones Personal Finance Writer
Chloe is a seasoned financial services professional with over 15 years of experience in banking, financial strategy, and risk management. She shares industry insights as a Financial Services Consultant and writer.
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