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Investing.com-- Australia’s central bank left interest rates unchanged on Tuesday, as policymakers weighed a recent uptick in inflation against signs of a recovering economy and lingering global uncertainty.
The Reserve Bank of Australia (RBA) kept rates steady at 3.60% as expected. It had paused its easing cycle in September after its most recent 25 basis-point cut in August.
The central bank said inflation had “picked up” in the September quarter, with trimmed mean inflation rising 1.0% for the quarter and 3.0% over the year -- higher than expected in August.
Headline inflation also jumped to 3.2% amid the expiry of electricity rebates in several states.
The central bank said some of the rise in inflation was due to temporary factors, but warned underlying price pressures remained. It expects core inflation to stay above 3% in the coming quarters before easing to around 2.6% by 2027, assuming one more rate cut in 2026.
“Given this, and the recent evidence of more persistent inflation, the Board judged that it was appropriate to remain cautious,” the RBA said in its statement, noting it would closely monitor incoming data.
The Australian dollar’s AUD/USD pair was largely unchanged after the decision, while the benchmark stock index S&P/ASX 200 held losses, trading 0.7% lower as of 04:01 GMT.
The central bank said private demand and housing activity were strengthening as earlier rate cuts filter through the economy, though the labor market remains “a little” tight, with unemployment at 4.5% in September.
Global uncertainty also weighed on the Board’s decision. The RBA cited ongoing geopolitical tensions, shifting trade policies, and the potential for slower world growth as risks to the domestic outlook.
Tuesday’s decision was unanimous, with the RBA reaffirming its focus on achieving price stability and full employment.