CANBERRA—The Reserve Bank of Australia (RBA) has left its key interest rate unchanged for a fourth straight month, providing some relief to borrowers struggling with 12-year high interest rates.
The RBA left the cash rate at 7.25 per cent following today's monthly board meeting, as widely expected by economists.
Economists say further signs that the economy has slowed in the past month, including an unexpected fall in employment growth, has again allowed the central bank to sit tight on rates.
However, some economists are concerned that official inflation data on June 23 will show a further acceleration in price pressures and push the RBA into lifting rates when the board next meets on August 5.
The RBA raised rates four times between August last year and March as underlying inflation soared to a 16-year high. In an accompanying statement with the rate decision, RBA Governor Glenn Stevens said considerable uncertainty remained about the outlook for demand and inflation.
"While the inflation outlook remains concerning, the board's assessment continues to be that demand growth will be moderate this year," Mr Stevens said.
"The most recent flow of information has given additional support to that assessment.
"Inflation is likely to remain relatively high in the short term, and the CPI will be further boosted in coming quarters by the recent rises in global oil prices."
Looking further ahead, inflation in both the consumer price index and underlying inflation should decline over time, provided demand continued to evolve as expected, Mr Stevens said.
The tightening in financial conditions, in conjunction with other factors including rising fuel costs, was working to restrain demand, he said.
"Indicators of household spending have recorded subdued outcomes over recent months, and credit expansion to both households and businesses has weakened significantly," he said.
"There have also been some tentative signs of an easing in labour market conditions."
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