The Reserve Bank of Australia (RBA) has kept the cash rate on hold at 4.35%.
It's the second meeting in a row that it has left rates unchanged.
The decision comes after a dip in inflation in June from 4% to 3.8%.
This was the lowest inflation rate since the start of the Iran war in February.
Despite this, the RBA said "inflation is still too high".
Here's what you need to know about the latest decision.
How interest rates work
The cash rate is the interest rate that banks charge each other for short-term loans.
We usually refer to changes in the cash rate as the RBA changing interest rates, because the cash rate affects interest rates across the economy, including home loans.
If you have a mortgage on a variable rate, the interest rate impacts your repayments.
If you have a savings account, it affects the interest you earn.
Inflation
In announcing the hold, the RBA said "inflation is likely to remain high for some time".
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Inflation measures the changes in the prices of goods and services.
The latest inflation data showed inflation was at 3.8% in June, which is down from 4% in May and 4.6% in March.
The RBA's aim is to get this rate down to its target range of 2-3%.
The cash rate is its main tool to do this (because people tend to spend less when interest rates are higher).
All four major banks predict the RBA will begin cutting rates next year.
NAB suggests it could be as early as the central bank's next meeting, scheduled for November.
For the most part, these predictions are dependent on a further cooling of inflation over the next 12 months.
However, the RBA has flagged that there are scenarios where inflation could rise again, such as if global oil supply doesn't recover.
Housing
Housing is always a key concern when setting interest rates as this impacts the amount of interest that mortgage holders pay on their loans.
Average house prices in Australia have declined in recent months, according to recent data by property tracker Cotality.
Prices fell by 0.7% in July, the biggest monthly decline since December 2022 (though they are still up 5.3% for the year).
The RBA noted in its decision that housing prices have fallen in some capital cities, and that "new housing loans [are] declining noticeably".
