The prospect of an interest rate hike next year was a significant topic of discussion, according to a recent statement by a financial expert. “We thoroughly deliberated on the circumstances that might necessitate an increase in interest rates sometime in the upcoming year,” she remarked.

She further highlighted that current data indicates signs of inflation becoming more widespread. “Part of this inflation may be persistent, so it warrants careful monitoring,” she added.

Ahead of Tuesday’s meeting, major banks and economists widely expected the cash rate to remain steady at 3.6 percent, aligning with forecasts. This expectation was reported by SBS News.

The latest figures for the September quarter revealed a consumer price index of 3.2 percent, which surpasses the Reserve Bank’s target inflation range of 2 to 3 percent.

Domain chief economist Nicola Powell said the turnaround in rate expectations could help take heat out of the rapid price growth in the housing market during the past year.

“However, it doesn’t solve the deeper affordability issues,” she said.

“Mortgage holders are still managing repayments that are significantly higher than they were before the tightening cycle began in 2022.”

The outlook for households and businesses has soured markedly from a few months ago, when bonds traders were pricing in one or two more cuts.

IG market analyst Tony Sycamore said: “This isn’t the statement of a central bank with one hand hovering over the rate hike button,” adding that CPI data points to a broader rise in inflation “part of which could prove persistent.”

— With additional reporting by the Australian Associated Press.

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