Australia's central bank held interest rates steady today as expected but warned there were still reasons to be vigilant against inflation risks, leading markets to pare back the chance of a rate cut this year.
"While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation," it added. Also as expected, inflation has proved to be sticky, having picked up to a five-month high of 3.6% in April. However, the hope is that cost-of-living relief from governments - including billions in electricity rebates - will help bring headline inflation lower in the second half.
While the RBA remained wary of stubborn inflation, economists said with prices coming down, it would be a mistake for the central bank to raise rates.