RBA Holds Steady on Interest Rates Amid Persistent Inflation Concerns

Australia's central bank, the Reserve Bank of Australia (RBA), has decided against lowering interest rates this year, following a sixth consecutive meeting where rates were left unchanged. The RBA cited ongoing high core inflation and the need for a restrictive policy to maintain inflation targets. The Australian dollar gained, and market expectations shifted, with no rate cuts now anticipated until at least February next year.

Australia's central bank, the Reserve Bank of Australia (RBA), ruled out the possibility of an interest rate cut this year on Tuesday, despite holding rates steady for a sixth straight meeting. The bank highlighted that core inflation is expected to decline only gradually.

The Reserve Bank of Australia kept rates at a 12-year high of 4.35%, with the Australian dollar gaining 0.3% to $0.6517. Three-year bond futures also saw extended declines. Markets had anticipated a rate cut by November, but this chance fell from 88% to 55% following the RBA's unexpectedly hawkish stance.

In post-decision remarks, RBA Governor Michele Bullock stated that the policy would remain restrictive to ensure inflation returns to target. The bank emphasized that underlying inflation needs to decrease further, despite headline inflation being projected to dip into the target range early next year, aided by government energy rebates.

(With inputs from agencies.)