“While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the board is not ruling anything in or out.”

The board noted there remained a lot of uncertainty over the economic outlook since its most recent forecasts were released early last month.

“Since then, there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth,” it said.

“At the same time, the revisions to consumption and the saving rate and the persistence of inflation suggest that risks to the upside remain.”

The board said household spending remained one of the biggest uncertainties.

“Real disposable incomes have now stabilised and are expected to grow later in the year, assisted by lower inflation and tax cuts. There has also been an increase in wealth, driven by housing prices,” it said.

“Together, these factors are expected to support growth in consumption over the coming year.

“But there is a risk that household consumption picks up more slowly than expected, resulting in continued subdued output growth and a noticeable deterioration in the labour market.”

Treasurer Jim Chalmers said by the time the RBA board next meets it will have been almost 9 months since it last lifted interest rates.

“Having rates on hold means a little bit more certainty in tough times for mortgage holders and small businesses,” he said.

Loading

Chalmers said inflation had almost halved since the election and government policies announced in the budget would take half a percentage point off inflation this financial year.

“While we’ve made welcome and encouraging progress in the fight against inflation, it’s not mission accomplished because people are still under the pump,” he said.

“We know that the interest rate rises already in the system are having an impact because people are under pressure and our economy is soft.”

Asia-Pacific economist for job website Indeed, Callam Pickering, said the future direction of interest rates would depend heavily on key data releases.

“With the economy facing considerable uncertainty, the RBA isn’t ruling anything out,” he said.

“Overall, monetary policy appears to be working but perhaps not as quickly as the RBA would like. A key question for monetary policy this year is simply how patient will the RBA be?”

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.