RBA interest rates: RBA leaves the cash rate on hold at 4.35pc as it ...

RBA governor Michele Bullock has urged federal and state governments not to stoke inflation with big-spending election promises and warned another interest rate rise was still a possibility as the central bank conceded it had underestimated public spending on services such as the National Disability Insurance Scheme.

A string of big spending announcements including in the lead-up to the Queensland election last month have pushed government spending to a record share of the economy. At the same time, Australia has recorded the highest underlying inflation rate of any advanced economy, according to RBA analysis released in its quarterly forecast update on Tuesday.

Michael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS. Connect with Michael on Twitter. Email Michael at [email protected]

Phillip Coorey is the political editor based in Canberra. He is a two-time winner of the Paul Lyneham award for press gallery excellence. Connect with Phillip on Facebook and Twitter. Email Phillip at [email protected]