RBA holds rates, hawkish stance as underlying inflation persists

Australia's central bank held interest rates and maintained its hawkish stance, saying policy would have to stay tight to combat stubborn underlying inflation.

The Reserve Bank of Australia (RBA) kept rates at a 12-year high of 4.35%.

"While headline inflation will decline for a time, underlying inflation is more indicative of inflation momentum, and it remains too high," the RBA’s board said in a statement.

"Data since then have reinforced the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out."

The move comes a week after the US central bank unveiled a bumper 50 basis point cut, sparking a rally in equities.

Reporting by Frank Prenesti for Sharecast.com