“The Board remains alert to the heightened level of uncertainty about the outlook,” it said.

“This is not the outcome that millions of Australian home owners would have wanted but it’s certainly the outcome that markets and economists were expecting,” he told reporters.

Recent inflation indicators

Inflation data released in two successive monthly reports by the Australian Bureau of Statistics found the CPI rose 2.8 per cent in the 12 months to July and then up to 3 per cent in the 12 months to August — the highest inflation rate since July 2024.

The RBA board also said domestic and international developments have driven uncertainties about the outlook for domestic economic activity and inflation.

However, a recent growth in consumption may not continue “particularly if households become more concerned about overseas developments”.

Treasurer responds to RBA decision

“The three interest rate cuts that are already in the system are already providing welcome relief to Australians with a mortgage.”

However, Opposition treasury spokesperson Ted O’Brien said the bank’s decision to hold the cash rate was indicative of economic mismanagement and a “spending spree” by the government

The chance of another interest rate cut this year

Chief economist at Betashares, David Bassanese, said the “hawkish” tone of the RBA board’s statement released on Tuesday “potentially suggests the RBA is less inclined to cut interest rates in November than previously expected” but the CPI data for the September quarter will be critical to its outlook and decision-making.