Borrowers now face the possibility of the central bank's next move being up rather than down, after the widely anticipated move on Tuesday.
The unanimous decision leaves the cash rate at 3.6 per cent after 75 basis points of easing since February.
Underlying or trimmed mean inflation, which is the Reserve Bank's preferred measure, jumped one per cent in the September quarter, which was materially higher than the bank's forecasts, governor Michele Bullock said in October.
Despite unemployment also rising to 4.5 per cent in September, money markets significantly lowered the odds of further rate reductions after last week's consumer price index print.
Traders have less than one cut fully priced in by the middle of 2026 and some market economists, including those at Commonwealth Bank, predict borrowers have already seen their last rate cut this cycle.
In its statement accompanying the decision, the RBA board said recent evidence of more persistent inflation meant it was appropriate to remain cautious.
"With private demand recovering and labour market conditions still appearing a little tight, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting," the statement read.
The board also revealed it was uncertain about its assessment that monetary policy was a little restrictive, meaning interest rates at their current level may not be dampening the economy as much as previously thought.
Uncertainties also surrounded its assumptions about how long it would take recent easing to take effect, the balance between aggregate demand and potential supply for goods and services, conditions in the labour market and the outlook for productivity growth.
"The board remains alert to the heightened level of uncertainty about the outlook in both directions."
In the RBA's updated staff forecasts, published alongside the cash rate decision, underlying inflation was expected to remain at 3.2 per cent until at least the middle of 2026 - above the bank's 2-3 per cent target band.
That's up from the RBA's most recent predictions in August that the trimmed mean would ease to 2.6 per cent by the end of this year.
Ms Bullock will provide further commentary on the bank's outlook at her post-meeting press conference later on Wednesday.
But at face value, the RBA's forecasts preclude another cut for at least the next nine months, given it will be hard-pressed to lower interest rates with the trimmed mean above the band.
Treasurer Jim Chalmers said Australians were still under pressure, despite the progress made in getting down inflation in recent years and the three rate cuts provided by the RBA earlier in 2025.
"I do acknowledge that many Australians would have wanted to see more rate relief at this meeting, but this decision was widely anticipated by markets and widely expected by economists," he said during parliamentary question time.
With no more rate cuts expected for 2025, Cotality head of research Eliza Owen said some heat would now come out of the property market, but an undersupply of housing would keep prices rising.
Vanguard senior economist Grant Feng said any further easing will depend on more definitive signs of weakening demand and sustained progress on disinflation.
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