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Shares had a third consecutive day of gains after investors lapped up Reserve Bank governor Philip Lowe's renewed pledge that rates won't rise until 2024.
The market moved little on Tuesday until Dr Lowe, speaking at a charity event, outlined stagnant wages and inflation, saying he could not understand expectations of rate rises next year or in 2023.
Investors steadily bought more shares and moved the ASX indices from minor losses to gains as the lure of cheap borrowing endures.
Deep Data Analytics chief executive Mathan Somasundaram understood the short-term response.
"It's all great for markets. The cost of borrowing is not going to go up anytime soon," he said.
"But the question is what's going to happen in the US? The US sets the cost of borrowing for the world."
US consumer inflation figures due in the next 24 hours will give decision-makers more to consider prior to a policy meeting next week.
Analysts expect core annual inflation to remain higher than four per cent.
Federal Reserve officials have said such high inflation would be temporary as the US economy recovers from its coronavirus recession.
However, persistently high inflation could prompt the central bank to bring forward the easing of economic support.
This would start by buying less in bonds and eventually lead to higher rates.
This is why Mr Somasundaram had an eye for the inflation figures.
"The market is worried the US is going to start tapering bond buying sooner rather than later," he said.
"If so, it doesn't matter what the RBA does."
The benchmark S&P/ASX200 index closed higher by 12.1 points, or 0.16 per cent, to 7437.3.
The All Ordinaries closed up by 14.2 points, or 0.18 per cent, to 7740.3.
Energy shares were best and rose more than four per cent.
US oil refiners have been preparing for Tropical Storm Nicholas. The storm threatens to disrupt the Texas coast with winds of up to 113 km/h.
OPEC also trimmed its oil demand forecast for the last quarter of 2021 due to the coronavirus.
Beach Energy was a top beneficiary. Shares closed higher by 7.21 per cent to $1.11.
Woodside Petroleum rose more than six per cent. Santos and Oil Search gained more than five per cent.
Shares in industrials fared worst and lost more than one per cent.
A main reason was container transport group Brambles losing more than eight per cent in its share price.
The company forecast profit to improve by one to two per cent this financial year, which may not have excited investors.
Brambles is spending on digital and supply chain programs and aims to better improve profit growth in subsequent years.
Westpac was prevented from selling a stake in its Asia Pacific business by regulators.
Papua New Guinea competition regulators stopped the sale of an almost 90 per cent stake in Westpac Bank PNG to Kina Securities.
The transfer would have given the bank up to $420 million.
Shares closed up 0.31 per cent to $25.72.
ANZ was the best of the big banks and rose by 0.33 per cent to $27.71.
Telix Pharmaceuticals shares surged by more than eight per cent early after US health authorities allowed a stage two study of its kidney cancer therapy.
The study will determine how Telix's TLX250 benefits patients with the most aggressive type of kidney cancer.
Shares closed higher by 4.57 per cent to $6.87.
The big miners were mixed. BHP and Rio Tinto gained 0.6 per cent. Fortescue shed 1.79 per cent to $18.08.
The Gina Rhinehart-backed Vulcan Energy is raising capital in a bid to produce lithium without carbon emissions.
Vulcan will raise at least $200 million from selling shares to professional investors for $13.50 each. It may raise a further $20 million by selling shares to existing investors at the same price.
The funds will help buy more equipment, land and energy infrastructure.
Shares last traded for $15.90.
The Australian dollar was buying 73.42 US cents at 1729 AEST, lower than 73.45 US cents at Monday's close.
ON THE ASX
* The benchmark S&P/ASX200 index closed higher by 12.1 points, or 0.16 per cent, to 7437.3 on Tuesday.
* The All Ordinaries closed up by 14.2 points, or 0.18 per cent, to 7740.3.
* At 1729 AEST, the SPI200 futures index was down 24 points, or 0.32 per cent, at 7409 points.
One Australian dollar buys:
* 73.42 US cents, from 73.45 cents on Monday
* 80.77 Japanese yen, from 81.00 yen
* 62.10 Euro cents, from 62.43 cents
* 52.97 British pence, from 53.27 pence
* 103.20 NZ cents, from 103.48 cents.