The Reserve Bank of Australia has warned of much higher inflation next year as it unanimously decided to leave interest rates on hold ahead of the Melbourne Cup while suggesting that tackling price pressures would take precedence over reducing unemployment from COVID-era highs.

As broadly expected, the cash rate remained at 3.6 per cent for the second straight meeting, with the decision unanimous among governor Michele Bullock’s nine-member monetary policy board.

“We still think there’s a bit of excess demand in the economy. This may be what has manifested in the inflation data. Nevertheless, we are alert to the risk we may have misjudged the gap between demand and supply in the economy in either direction,” Ms Bullock told reporters in Sydney.

“Our judgement is that the material miss o

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