SYDNEY, May 7 (Xinhua) -- The Reserve Bank of Australia (RBA) left the cash rate target unchanged at 4.35 percent, following a monetary policy meeting that concluded on Tuesday.

After the central bank announced a 25-basis-point hike in November last year, the key interest rate has been held at 4.35 percent for a fourth board meeting in a row.

The RBA board revealed in a statement that the high inflation is "falling more gradually than expected," though the CPI grew by 3.6 percent over the year to the March quarter, down from 4.1 percent over the year to December.

"Underlying inflation was higher than headline inflation and declined by less. This was due in large part to services inflation, which remains high and is moderating only gradually," said the board.

"Higher interest rates have been working to bring aggregate demand and supply somewhat closer towards balance. But the data indicate continuing excess demand in the economy, coupled with strong domestic cost pressures, both for labor and non-labor input," it noted.

According to the central bank, Australia's inflation is forecast to return to the target range of 2-3 percent in the second half of 2025 and to the midpoint in 2026, while the process of returning inflation to target is "unlikely to be smooth," given an uncertain economic outlook.

"In the near term, inflation is forecast to be higher because of the recent rise in domestic petrol prices, and higher than expected services price inflation, which is now forecast to decline more slowly over the rest of the year. Inflation is, however, expected to decline over 2025 and 2026," said the RBA board.

"The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks," it added. Enditem

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