RBA boss Michele Bullock says the central bank has sent a “deliberate” message about its likely next move on interest rates – despite holding the official cash rate at 4.35 per cent for the rest of the year.

Borrowers hoping for repayment cheer to ring in the new year were left disappointed on Tuesday, as the Reserve Bank of Australia against left its key interest rate unchanged.

The widely expected call on Tuesday marks more than 12 months at 4.35 per cent. The central bank has not changed rates since its last 25-basis-point lift in November 2023.

But, at last – for some borrowers anyway – there appears to be a hint of a welcome change to come.

The bank’s statement on Tuesday, following its meeting, left out the words “not ruling anything in or out”. They have featured in almost every post-meeting statement in the past year – as the RBA board has signalled it would still consider further hikes.

“It is deliberate and the board wanted to give the message that they have noticed with [some] data that is much softer – and it’s a bit mixed but some of it is, on balance, a bit softer than we had expected,” Bullock said on Tuesday.

“The board wanted to convey that their views are evolving … we’re not saying what we might do but we are acknowledging that there is some softening and our forecasts do see inflation coming back down gradually over the next year.”

Nor did the board consider a rates hike on Tuesday meeting, Bullock said.

“As each quarter goes by, and our forecasts look like they are basically in line with [actual data], that gives us a little bit more confidence in the future,” she said.

“We’re not saying that we’ve won the battle against inflation yet but we are saying that we’ve got a bit more confidence that things are evolving as we think in our forecasts.”

In the post-meeting statement, the board said underlying inflation remained “too high” to consider a cut.

“The November statement of monetary policy forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint,” it said.

“Recent data on inflation and economic conditions are still consistent with these forecasts, and the board is gaining some confidence that inflation is moving sustainably towards target.”

Earlier, federal Treasurer Jim Chalmers said there had been good progress in the fight against inflation.

“But we know that doesn’t always translate into how people are feeling or faring in the economy. We know the economy’s soft. We know that people are under substantial pressure,” he said.

“The [central bank’s] statement makes it clear that the board is gaining some confidence that inflationary pressures are declining.”

The majority of economists now tip May for the RBA to start cutting borrowing costs.

February – when the bank board will next meet – still remains a possibility and is the forecast pick of Commonwealth Bank.

Bullock said RBA forecasts showed inflation continuing a steady decline.

“If that eventuates, then there’s going to come a point where we’re going to be confident enough that inflation will be back in the band to start easing interest rates. When that will be, I don’t know,” she said.

“But the point I think of the statement today was to just let people know that we have noticed this, as has everyone else … and we do need to take a little bit of signal from that.

“What we’ll be doing is looking at the data that comes in the next month or so, before our February meeting, and assessing what that means for inflation and whether or not we’re going to meet our forecasts.”

Australia’s annual headline inflation rate is back within the RBA’s 2-3 per cent target range but the focus has been on still-elevated underlying price pressures and the tight labour market.

-with AAP