(MENAFN) The Reserve Bank of Australia (RBA) kept its benchmark interest rate unchanged Tuesday in a unanimous decision, responding to an unexpected inflation spike that threatens the nation's economic stability.

The central bank's Monetary Policy Board announced following its scheduled Tuesday session that the cash rate target will remain at 3.60 percent, meeting widespread expectations from economists and major financial institutions.

The hold comes after Australia's inflation rate rocketed to a two-year peak during the July-September quarter. Official figures released in October by the Australian Bureau of Statistics (ABS) revealed the troubling uptick in consumer prices.

Annual trimmed mean inflation—the RBA's preferred gauge of underlying price pressures—reached 3.0 percent in the twelve months ending September, climbing from 2.7 percent recorded in the year through June.

In its monetary policy statement, the board acknowledged significant uncertainty clouding both domestic economic activity and inflation forecasts due to developments at home and abroad.

"Uncertainty in the global economy remains elevated, but so far there has been minimal impact on overall growth and trade, and many forecasters have revised up their near-term expectations for world growth. Trade policy developments are still expected to have an adverse effect on world growth over time," it said.

The central bank had previously projected in August that underlying inflation would stabilize near the center of its 2-3 percent target band through late 2027.

Earlier in 2025, the RBA reduced the cash rate three times by 0.25 percentage points each, bringing it down from 4.35 percent at year's start.

The Monetary Policy Board's next rate-setting meeting is scheduled for December 9.

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