Policymakers at Australia's central bank considered raising borrowing costs for the fourth time this year at their most recent meeting in August before unanimously deciding to leave the cash rate unchanged at 4.35%.

One of the arguments to raise the rate by 25 basis points was based on an assessment of risks to the inflation forecast, with several members advocating for further tightening due to the possibility of upside risks materializing, according to the minutes of the meeting released Tuesday.

However, other members pointed to possible downside risks providing an offset, including the labor market easing faster than expected and a more material negative impact on economic activity from the conflict in the Middle East.

Ultimately, all Reserve Bank of Australia board members agreed that "upcoming decisions would benefit from additional information that could strengthen their conviction about the outlook for inflation."

In June, the central bank saw some prospects for a resolution to the Middle East conflict, but tensions have persisted and continue to disrupt energy production and shipping in the region. Policymakers noted that elevated energy prices and high demand for goods used to develop artificial intelligence services have contributed to inflationary pressures in some countries.

On the domestic front, inflation in Australia continues to be well above target even after an unexpected slowing in the June quarter, with policymakers assessing that some capacity pressures remain in both the labor market and the broader economy.

In leaving the rate unchanged in August, board members also noted that data since their previous meeting pointed to an economy that is progressing towards the board's objectives, the minutes showed.