By Poppy Johnston in Canberra

Mortgage holders still have longer to wait for interest rate relief as the Reserve Bank of Australia warns underlying inflation remains “too high”.

All bets were on no change when the central bank board announced its decision ahead of the Melbourne Cup on Tuesday.

The call follows welcome progress on inflation but not enough for the RBA to start cutting the cash rate just yet.

Price pressures have been ravaging households and businesses but are starting to ease, with annual headline inflation printing at 2.8 per cent in the September quarter, within the RBA’s two-three per cent target range.

Yet the focus has been on underlying inflation, which has been moderating but still above target at 3.5 per cent in September.

“While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high,” the board said in a statement.

“The November statement of monetary policy forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.

“This reinforces the need to remain vigilant to upside risks to inflation and the board is not ruling anything in or out.”

Fresh forecasts from the central bank suggest the economy is unfolding broadly as it expected back in August.

Underlying inflation is still elevated but the profile was slightly more optimistic, with the trimmed mean downgraded slightly to have it back within target six months earlier, hitting three per cent by June 2025.

Economic growth forecasts were trimmed, with GDP now peaking at 2.3 per cent next year.

The economy is on track for weaker growth in the near term due to softer private demand as well as slower expected growth in net overseas migration thanks to the federal government’s tighter student visa policy, the RBA said.

With weaker growth, unemployment is now anticipated to peak a little higher, at 4.5 per cent. The profile for wage growth was also downgraded modestly.

“Labour market conditions remain tight but are expected to return to balance by late 2025,” the RBA said in the statement of monetary policy.

“While this assessment is little changed from the August statement, the earlier easing in some labour market indicators has stalled recently and this presents some risk that labour market conditions ease by less than expected.”