The Reserve Bank of Australia (RBA) announced a fresh hold on interest rates after September’s consumer price index (CPI) data reinforced the need to remain vigilant about upside risks to inflation.

The RBA left interest rates unchanged at 4.35% for the eighth time in a row.

The market was more or less unanimous on the RBA keeping the cash rate on hold.

The RBA's last rate hike took place in November last year, marking its 13th since it began its tightening cycle in May 2022.

Since then, subdued average inflation has eased from 5.1% year-on-year to 3.5% and, while in line with the RBA's August forecast, is believed to have prompted the central bank to take a cautious stance on rate cuts.

Last month's CPI pushed back the outlook for rate cuts to 2025, underscoring ongoing concerns about core inflation, which remains stubbornly above the Reserve Bank's target.

Namely, while the latest printout of the consumer price index showed inflation falling to 2.8 percent in the 12 months to September, core inflation remained above the Reserve Bank's target.

At the time, Commonwealth Bank of Australia's Gareth Aird admitted that while the consumer price index for the September quarter showed continued disinflation, it had not advanced at the pace expected on a baseline basis.

“The result is that we no longer expect the RBA to cut interest rates in December 2024. Instead, we anticipate February 2025. a 25bp rate cut,” Aird said at the time.

Similarly, Andrew Canoby, director of fixed income at Franklin Templeton, said this inflationary footprint is a sign that a rate cut in 2024. is unlikely as core inflation and a strong labor market point to continued resilience.

Also offering his view at the time, State Street Global Markets' Dwyfor Evans warned that underlying price pressures in health care, leisure, food and insurance showed persistent inflationary trends, leading him to forecast early 2025. as a more realistic time frame for any RBA rate cuts.

"Consensus expectations of disinflation in the third quarter cannot mask concerns that online price pressures in Australia remain persistently high against the RBA's 2-3 per cent target," Evans said.

“A cautious RBA could again point to early 2025. to ease interest rates when it meets and releases its monetary policy statement on November 5."