The Reserve Bank may cut interest rates as soon as February, after governor Michele Bullock revealed she has more confidence inflation is falling toward the central bank’s 2 to 3 per cent target, reviving the prospect of a pre-election rate cut.

The RBA left the cash rate on hold at 4.35 per cent on Tuesday. In a post-meeting statement, which analysts universally viewed as dovish, the central bank junked its longstanding threat that it was “not ruling anything in or out” when it came to another rate rise.