SYDNEY, Aug 6: Australia's central bank held interest rates steady at a 12-year high Tuesday and warned that a cut is "not on the agenda" as it battles stubbornly high inflation.
The Reserve Bank of Australia, which left the key rate at 4.35 percent, had even considered raising rates, governor Michele Bullock warned.
"A rate cut is not on the agenda in the near term given what we know," she told a news conference, saying high prices might lead rates to stay "higher for longer".
"I know this is not what people want to hear," Bullock said.
The central bank's board could still raise interest rates if needed to curb inflation, she said.
Australia's annual inflation rate eased a little to 3.8 percent in June but remains well above the RBA's target range of 2.0-3.0 percent.
The central bank is closely watching world stock market ructions, she said, blaming the volatility in part on a reaction to economic news at a time of "considerable uncertainty" about the outlook.
World markets have been roiled over the past few trading days following a weaker-than-expected US jobs report and a Japanese interest rate rise that caught many investors by surprise.
Bullock said markets had already "settled down a bit" on Tuesday, as Tokyo stocks shot up more than 10 percent after a record sell-off the day before.
"I think we just need to have a little bit of caution and a little bit of calm," she said.
Treasurer Jim Chalmers welcomed the bank's decision to leave rates unchanged, saying Australians were already "doing it tough".
"The last thing they needed today was more cost of living pressure," he said.
Chalmers pointed to "very substantial global economic uncertainty that we are seeing play out in markets around the world", blaming weak US jobs growth and tech earnings, as well as the rise in Japanese interest rates.
"This is a really important warning against complacency, the fact that we've seen this kind of volatility in international markets, and also the fact that we saw a much weaker jobs outcome in the US in the first place," Chalmers told reporters. —AFP
