The Reserve Bank of Australia's monetary policy board decided to keep the cash rate target at 4.10% and the interest rate on exchange settlement balances at 4%.
The decision reflects ongoing moderation in underlying inflation, which has fallen significantly since 2022 as higher interest rates have helped balance demand and supply.
While inflation continues to ease in line with expectations, the board remains cautious, seeking sustained progress toward the target inflation midpoint.
The economic outlook is uncertain, with domestic demand recovering, real household incomes improving, and easing financial stress.
However, some sectors continue to face weak demand, limiting businesses' ability to pass on cost increases.
Labour market conditions remain tight, with low underutilisation but high unit labour costs due to weak productivity growth.
Wage pressures have eased slightly but remain elevated. The board highlighted risks to both domestic and global economic activity.
While household consumption is expected to rise with income growth, any slower-than-expected recovery could lead to subdued output growth and further deterioration in the labour market.
International uncertainties, such as geopolitical tensions and global tariff policies, add complexity to the outlook, potentially affecting global confidence and inflation.