Australia’s central bank keeps rates at 3.85%, stuns markets

SYDNEY: Australia’s central bank on Tuesday left its cash rate steady at 3.85%, a shock for markets that had confidently wagered on a cut, saying the majority of the board wanted to wait for more information to confirm inflation was slowing.

Wrapping up a two-day policy meeting, the Reserve Bank of Australia said six members had voted to hold rates steady while three voted against, a rare split decision for the board.

Markets had been almost fully priced for an easing to 3.60% this week given core inflation had slowed to the mid-point of the RBA’s 2% to 3% target range and consumer spending was proving weaker than expected.

Uncertainty caused by US tariffs also argued for a cut as insurance against a global slowdown.