In its post-meeting statement, the Board acknowledged that while inflation has "fallen substantially" since its 2022 peak, recent months have seen enough of a pick-up in underlying price pressures.
"The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures," the Board said.
Recent ABS inflation data showed trimmed mean inflation rose 3% over the year to September, well above the RBA's forecast of 2.6%.
In addition to hotter-than-expected inflation figures, the policy-setting committee also noted the tight labour market conditions as another reason to remain cautious and keep rates on hold.
"The Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve," the Board said.
Today's decision was unanimous, with the central bank choosing to wait for clearer evidence on whether inflation risks are temporary or something more persistent.
Housing momentum continues to build
Recent RBA commentary and market data point to housing activity and prices continuing to pick up, supported by easier financial conditions and ongoing access to credit.
The post-meeting statement suggests the Board sees the lift in housing activity not as a short-lived bounce, but part of a broader recovery in private demand.
With the cash rate on hold again, investors are expected to feel emboldened to re-enter the market, taking advantage of stabilising borrowing costs after a period where borrowing power was repeatedly slashed by rising rates.
And with earlier rate cuts still flowing through to household budgets and sentiment, the RBA suggests the full effects of easing are yet to materialise.
For investors, that could mean borrowing conditions may continue to improve even without further immediate rate moves, assuming inflation does not force the central bank into another tightening cycle.
Will the RBA hike the cash rate next year?
The next monetary policy board meeting is scheduled on 2-3 February 2026, during which economists expect the Board to hike the cash rate.
"The RBA monetary policy Board delivered a short statement today, reflecting a shift in distribution of risks to both inflation and growth," NAB group chief economist Sally Auld said.
"This represents a further step in a hawkish direction, and sets the RBA up to deliver a February rate hike should there be more evidence of a growth pick up and or evidence that inflationary pressures are persisting."
Economists of the third-largest bank in Australia believe the RBA has "little room" to absorb any further surprises without recalibrating policy, especially as the economy continues to recover and private demand grows stronger than expected.
"For now, we see the RBA on hold next year, but risks to the outlook are clearly asymmetric," Ms Auld said.
February meeting is now considered "live" for a rate hike "should forthcoming inflation data validate the RBA's fears".
Rents likely to push higher as demand outpaces supply
With housing demand recovering and supply unable to keep pace, the ingredients for continued rental growth remain firmly in place.
The rental market remains tight with vacancy rates holding close to record lows at 1.5% in November, according to the latest Cotality Home Value Index report.
With vacancy rates remaining low, rents are continuing to rise.
The national rental index rose half a percent in November to be 5.0% higher over the past 12 months.
This marks the highest annual pace of rental growth since the same time last year.
"The ongoing rise in rental costs is occurring against a backdrop of severe rental affordability pressures," Cotality research director Tim Lawless noted.
Image courtesy of the Reserve Bank of Australia
