SYDNEY, Dec 5 Reuters Australia39;s central bank held interest rates steady on Tuesday as expected, buying it more time to assess the state of the economy and decide whether to tighten further next year even as the U.S. and Europe are seen as almost certain to ease.

Wrapping up its December policy meeting, the Reserve Bank of Australia RBA kept rates at a 12year high of 4.35, adding economic data received since November when it hiked by a quarterpoint had been broadly in line with expectations.

Markets had wagered heavily on a steady outcome given inflation had eased a little more than expected in October. They slightly pared back the chance of a further rise to 4.6 in the new year to 38 from 43 before the nochange decision.

The local dollar extended earlier declines to be down 0.6 to 0.6581 and threeyear Australian government bond yields eased 5 basis points to 4.00.

Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market, RBA Governor Michele Bullock said.

Bullock also stuck with the watered down tightening bias from last month, saying whether further rate hikes are required would depend upon the data and the evolving assessment of risks.

It was the RBA39;s last chance to raise rates before its next meeting in February and provided Christmas relief to mortgage holders, many of whose monthly payments have jumped by more than A1,000 662 a month amid elevated…