RBA keeps policy rate at 12year high of 4.35
Underlying inflation remains too high, central bank says
Reiterates it is not ruling anything in or out on policy
SYDNEY, Nov 5 Reuters Australia39;s central bank held interest rates steady on Tuesday, as expected, and cautioned policy would need to stay restrictive for some time yet, strongly suggesting borrowers could expect no Christmas cheer this year.
There was subdued market reaction, with the Australian dollar hovering at 0.6595. Rate swaps point to a scant chance of a rate cut this year, with a first easing not fully priced in until May next year.
Wrapping up its November policy meeting, the Reserve Bank of Australia RBA kept rates at a 12year high of 4.35. It again repeated that it was not ruling anything in or out on policy, in a crucial paragraph that is largely similar to the one in September.
Once again, the central bank did not explicitly consider either a hike or cut in rates this time.
Markets have heavily wagered on a steady outcome as the labour market stayed surprisingly strong and third quarter core inflation was still a little sticky.
While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high, said the board in a statement.
This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
The RBA has held its policy steady for a…