09:16 AM EST, 11/04/2025 (MT Newswires) -- The Reserve Bank of Australia left its Cash Rate unchanged at 3.6% overnight Monday, as expected, said Commerzbank.

Until recently, most economists had expected a cut in November, wrote Commerzbank in a note to clients. However, last week's inflation figures showed that the inflation problem is more serious than expected.

Due to expiring subsidies, a rise in inflation was expected.

However, no one anticipated that it would exceed the upper end of the RBA's target range with 3.2% year over year, stated Commerzbank. Even more important was probably the fact that the rise in inflation was broader and not solely attributable to special effects.

The trimmed mean inflation rate, which adjusts the overall rate for statistical outliers, also rose to 3.0%, significantly higher than the central bank had expected in August (2.6%), it pointed out.

Markets had already anticipated an unchanged key interest rate since the last inflation figures. Since then, however, the Australian dollar (AUD) hasn't gained against the US dollar (USD), as might be expected with sustainably higher interest rates, but has fallen by around 1.5%, added Commerzbank.

This is likely due to the unexpected rise in inflation overcompensating for interest rate expectations. The bank assumes that higher inflation, if it wasn't an outlier in Q3, will continue to weigh on the AUD.

Even an early end to the interest rate cycle by the RBA would only provide temporary support for the AUD, as further interest rate cuts weren't expected anyway. As long as the Australian economy remains trapped in an environment of weak growth and elevated inflation, the AUD will continue to struggle, according to Commerzbank.