SYDNEY, Sept 5 Reuters Australia39;s central bank on Tuesday kept interest rates steady for a third month at the last meeting chaired by Governor Philip Lowe, encouraging speculation the tightening cycle was over as policymakers indicated they have a firmer grip on prices.

Wrapping up its September policy meeting, the Reserve Bank of Australia RBA held rates at 4.10, and said recent data were consistent with inflation returning to the 23 percent target range in late 2025. It reiterated that further tightening may still be required to bring inflation to heel.

Markets and economists had wagered on a steady outcome after a batch of economic data including inflation, wages and jobs came in below expectations and offered no compelling reason to restart the tightening cycle.

Market reaction was predictably muted reflecting the widelyexpected decision, with the Australian dollar nursing earlier losses at 0.6422. The third straight pause, however, has encouraged bets that the tightening cycle is over even as market pricing suggested rate cuts would commence only late in 2024.

A majority of economists polled by Reuters still expect one more hike by the end of the year after the third quarter inflation report, which is likely to point to lingering price pressures.

Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation, although growth has slowed, said Lowe, who will be handing over the reins to his…