Fund managers say traders have overblown the comments from governor Michele Bullock and are siding with the central bank on the rate outlook.

Australia’s central bank signaled it will keep its key interest rate at a 12-year high in the near term as it struggles with stubborn inflation that’s holding it back from joining a global easing cycle.

The Reserve Bank has held the cash rate at 4.35 per cent following its board meeting on Tuesday, flagging that inflation is “still too high”.

The RBA board has left the cash rate on hold at 4.35 per cent and continued to rule out a near-term rate cut with as underlying inflation remains too high.

The Reserve Bank of Australia is widely expected to keep interest rates on hold on Tuesday at the 12-year high of 4.35 per cent.