The Reserve Bank of Australia remains on hold, and inflation expectations have suddenly been raised.

The Reserve Bank of Australia has just announced that it will maintain the Benchmark Interest Rate at 3.60%, but the signals behind it are quite interesting.

Core Data

Inflation Surges Unexpectedly: Core inflation jumped from 2.7% to 3.0% in Q3, exceeding expectations. Overall inflation soared to 3.2%, partly due to the withdrawal of electricity subsidies. The central bank believes that some of the rebound is due to temporary factors, but implies that inflationary stickiness is stronger than expected.

The job market remains resilient: Although the unemployment rate has risen from 4.3% to 4.5%, the number of job vacancies is still large, and companies have not significantly eased their hiring difficulties. The growth rate of unit labor costs is still high, which means the pressure of wages pushing up prices is still present.

Private demand is quietly warming up: Consumer data is improving, the real estate market is strong, housing prices are rising, and construction costs are also increasing. This indicates that the effects of interest rate cuts are beginning to show, but it has also raised the demand for workers and production capacity.

The Dilemma of the Central Bank

The central bank is caught in a dilemma: on one hand, inflation is more persistent than expected, and on the other hand, global uncertainty is rising (trade wars, geopolitical risks). If private demand continues to grow beyond expectations, it could further push up prices and wages; however, if demand weakens or external shocks intensify, it may instead necessitate further interest rate cuts.

Decision Logic: Maintain the current interest rate for now and wait for subsequent data. The central bank has clearly stated that it will “act cautiously and continue to assess”—translated, this means they haven't figured out the next steps, data-driven, and flexible adjustments.

Meaning to the Market

• The Reserve Bank of Australia may pause the interest rate cut cycle, with little room for rate hikes in the short term.
• If subsequent inflation data continues to be sticky, it may stimulate the Australian dollar to strengthen.
• For cryptocurrency projects that rely on AUD financing, exchange rate fluctuations are worth paying attention to.