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Australia’s central bank left interest rates steady at 3.6% as predicted by analysts, according to a press release Tuesday.
The Reserve Bank of Australia (RBA) said the board made the decision unanimously because inflation had picked up again recently, although it was due to temporary factors.
The RBA board was less hawkish in its tone, saying it would watch how the data would move before raising rates again.
“The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,” the RBA said.
However, RBA Governor Michele Bullock signaled the possibility of rates going up in the future, especially if they go beyond the central bank’s 2% target.
“If inflation continues to be persistent and looks like it is not coming back down towards the target, then I think that does raise questions about how tight financial conditions are and the board might have to consider whether or not it’s appropriate to keep interest rates where they are or in fact at some point raise them,” Bullock said during a press conference.
Westpac predicts two more 25-basis-point rate cuts until the middle of 2026, potentially bringing the policy rate to 3.1%. The Commonwealth Bank of Australia forecasts the cash rate will remain unless there are risks that could bring it up in the following year.