The timing of rate cuts remains a source of speculation following the Reserve Bank of Australia’s decision to keep interest rates on hold at 4.35 per cent at its February board meeting.

The no-change call was widely expected given annual inflation came in below expectations at the last print.

But in its post-meeting statement, the board said inflation was easing but still high and a further increase in interest rates could not be ruled out.

Governor Michele Bullock similarly kept her options open and said the board would be watching the economic data to guide its next move.

“Nothing’s in, nothing’s out,” she told reporters on Tuesday.

Assumptions built into the central bank’s updated forecasts, released at the same time as the cash rate decision, have the cash rate holding steady at 4.35 per cent until mid-2024 before easing to roughly 3.25 per cent over 12 months.

Ms Bullock said assumptions were not commitments but rather “something to work with” when forecasting.

She also said projections became increasingly uncertain the further into the future they looked.

Under the updated assumptions and evolving economic conditions, the RBA sees inflation falling to 3.3 per cent by June this year before easing very gradually to 2.8 per cent – within the two to three per cent target range – by December 2025.

Former RBA governor Bernie Fraser said the central bank was right to sit and wait for things to unfold.

He did not anticipate another interest rate hike given inflation was coming down and unemployment was creeping up.

“Those two things will suggest that it’s more likely that interest rates would be adjusted downwards at some point in the future rather than pushed up again,” he told ABC radio on Wednesday.

Yet he said there were still inflation risks to be mindful of, such as the conflict in the Middle East driving up the carrying cost of imported goods.

Westpac chief economist Luci Ellis does not expect further increases to the cash interest rate but said cuts were still some way off.

“The RBA board will need to be sufficiently comfortable that inflation will definitely decline into the two-three per cent target band,” she said.

“It will also want to be confident in the recovery in productivity.”

The RBA was likely to reach this level of comfort come September, she added.

Commonwealth Bank also expects an easing cycle to begin in September, with National Australia Bank and ANZ both pencilling in a November start.

HSBC’s Paul Bloxham is tipping a longer wait on hold before cuts start in early 2025, whereas AMP Australia’s Shane Oliver expects the easing cycle to begin midway through this year.

But Dr Oliver warned the road to rate cuts would probably be bumpy.

“The main risk is that rate cuts get delayed till later this year reflecting sticky services inflation, supply side risks and the RBA waiting to see how the changed stage three tax cuts are impacting demand,” he wrote in a note.