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Australia central bank holds rates, warns hikes might not be over

BY Reuters | ECONOMIC | 12:39 AM EDT

SYDNEY, June 16 (Reuters) - Australia's central bank held its cash rate steady at 4.35% on Tuesday, saying the economy was slowing in the face of tighter financial conditions but warned it might hike the rate again if it was needed to control inflation.

Wrapping up its June policy meeting, the Reserve Bank of Australia (RBA) said inflation was still too high and it would do whatever necessary to bring it down, "including increasing the cash rate target further if required."

It had already raised rates by 75 basis points since February as it struggled to contain stubborn inflationary pressures in the face of surging energy costs.

Markets had wagered on a steady outcome given softness in recent economic data and a prospective peace deal in the Middle East that had pulled down oil prices. (Reporting by Wayne Cole and Stella Qiu; Editing by Tom Hogue)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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