The Reserve Bank has met expectations, leaving Australia’s official interest rates unchanged for the 10th month in a row.

Tuesday’s decision to hold the cash rate at 4.35 per cent, where it has been since November last year, was widely expected by money-market watchers.

Ahead of the announcement, experts warned a rate cut was not on the minds of Reserve Bank board members – and borrowers should even be prepared for another rise.

“While the next move from the RBA is expected to be a cut, Governor [Michele] Bullock is likely to once again, refuse to rule out anything at the board’s post-meeting press conference this afternoon,” loan comparison site Rate City warned on Tuesday morning.

“Borrowers should still prepare for the worst – another rate hike – and build a buffer to be on the safe side.”

Source: Rate City

In its statement, the bank appeared to back up that assessment.

“Sustainably returning inflation to target within a reasonable timeframe remains the board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer-term inflation expectations have been consistent with the inflation target and it is important that this remain the case,” it said.

“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”

All big four retail banks had also forecast the official rate would stay at 4.35 per cent on Tuesday.

That was despite the US Federal Reserve slashing its key interest rate half a percentage point last week, putting pressure on Australia’s central bank to bring forward its plans for relief.

ANZ and Westpac expect the RBA will not deliver its first cut until February, while NAB is tipping May.

ANZ economists Brian Martin and Daniel Hynes said the board had only two options on Tuesday: Hold or hike.

“We don’t think the Fed’s decision to ease by 50 basis points will directly influence the RBA’s decision,” they said.

“The RBA is at a different point in the cycle to the Fed. While the RBA’s focus remains on inflation, the Fed is more concerned with the labour market.”

Only the Commonwealth Bank among the big four still offers hope of a pre-Christmas rate cut. Head of Australian economics Gareth Aird predicts the Reserve will cut rates at its final meeting of the year in December.

“We expect the stage-three tax cuts to have only a minimal positive impact on household consumption in quarter three 2024,” he said.

“This, in turn, should leave the RBA more assured that inflation will return sustainably to the target band, thereby opening the door for a December rate cut.”

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent – https://t.co/upsMaOzONa

— Reserve Bank of Australia (@RBAInfo) September 24, 2024

Independent economist Saul Eslake also believes a cut won’t come until February 2025, unless data shows something unexpected.

“I really do struggle to see why they would do it any earlier unless the underlying inflation rate falls much more quickly than they expected it to,” he said.

“Even though the headline inflation rate is going to fall … largely as a result of electricity bill rebates provided by the federal and some state governments, the underlying inflation rate is still likely to be close to 3.5, which is far above the Reserve Bank’s target to begin cutting rates.”

Australian Bureau of Statistics data released earlier in September showed the unemployment rate steady at 4.2 per cent in August.

The monthly consumer price index will be published on Wednesday.

Treasurer Jim Chalmers has previously criticised the central bank as having smashed the economy, as the government holds out hope for rate relief before an election is held in 2025.

Prime Minister Anthony Albanese reaffirmed the Reserve’s independence, after the Greens urged the government to intervene and cut rates.

Albanese said Labor remained committed to planned changes recommended in a review of the central bank, which included removing the treasurer’s power to overrule the Reserve Bank’s decision.

“We have an independent Reserve Bank and the Greens’ policy, quite frankly, just would have a negative impact on economic growth and the way that we conduct economic policy. Central banks are independent of government. That occurs in just about every major economy in the world,” he said on Tuesday.

Albanese said the government was doing its part to lower inflation, which in turn would allow rates to come down.

-with AAP