RBA Holds Rates at 3.60%

Australia’s central bank kept its benchmark cash rate unchanged at 3.60% on Tuesday, in line with market expectations, while cautioning that inflation risks have shifted to the upside.

Concluding its two-day policy meeting, the Reserve Bank of Australia (RBA) said it needed more time to assess the persistence of price pressures. It also noted that domestic demand has been stronger than anticipated, increasing the possibility of renewed inflationary momentum.

Markets had fully priced in a hold this week following firm data on both inflation and consumer spending, and are now assigning a rising probability of a rate hike sometime next year if price pressures do not ease as expected.