The Reserve Bank concedes it underestimated inflationary pressures in the economy as it left interest rates on hold and the case mounts for the next move to be up.

In a unanimous move that was widely predicted by economists and bonds traders, the central bank held the cash rate steady at 3.6 per cent on Tuesday.

Hopes of a Melbourne Cup day cut were dashed after a shock surge in inflation reported last week.

Underlying 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.

As that spike will continue to show up in data for the next 12 months, the RBA drastically revised up its inflation forecasts in its Statement on Monetary Policy, released alongside i

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