Hopes for another interest rate cut this year have been dealt a big blow after signs of renewed inflation pressure spooked the Reserve Bank.

The RBA’s board held its cash rate unchanged at 3.6 per cent in a unanimous decision on Tuesday.

Governor Michele Bullock was upbeat that Australia’s economy was in recovery mode but warned that the war against inflation may not yet be won.

“Inflation remains within the target range but recent data indicates there could be a bit more upward pressure than we thought in August,” Ms Bullock said.

“Services and housing inflation were a little higher than we were expecting.

“I don’t think it suggests that inflation is running away. But we do need to be a little bit cautious.”

The full impact of three previous rate cuts has also not been fully felt, s

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