The Reserve Bank of Australia (RBA) has kept the official cash interest rate unchanged at 3.60%.
The announcement, which was consistent with market expectations, came at the end of the traditional two-day bi-monthly meeting of the RBA’s Monetary Policy Board.
This was the second time in three months that the central bank had kept rates on hold, having cut them from 3.85% in August.
The market had been factoring in a 25 basis point reduction before an unexpectedly high inflation figure last week.
However, according to the ASX's RBA Rate Tracker, the odds for a 25 basis point cut tumbled to just 7% as of 3 Novermber, down from 62% a week earlier.
In a statement following the unanimous decision, the Board said although financial conditions had eased since the beginning of the year, it would take some time to see the full effects of earlier cash rate reductions.
“Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve,” the central bank said in the statement.
“The Board remains alert to the heightened level of uncertainty about the outlook in both directions.”
The Board said although trimmed mean inflation in the year ended September of 3.0% was materially higher than expected at the time of the August Statement on Monetary Policy, some of the increase was due to temporary factors.
The central forecast in the Policy, which was based on a technical assumption of one more rate cut in 2026, had underlying inflation rising above 3 per cent in coming quarters before settling at 2.6 per cent in 2027.
“There are also uncertainties regarding the assessment that monetary policy remains a little restrictive, the lags in the effect of recent monetary easing, the balance between aggregate demand and potential supply for goods and services, conditions in the labour market and the outlook for productivity growth,” it said.
“These uncertainties present risks in both directions to the inflation and employment outlook.”
