The RBA has not closed the door on further rate cuts, according to the minutes of its Monetary Policy Meeting held on the 2 June, and released today
Explaining its decision to leave rates unchanged at 3%, the board said it "did not see a pressing case for any further action" though it "viewed the inflation outlook as affording scope for some further easing of monetary policy, if that were to be needed to support demand at a later stage".
"Monetary policy had been eased significantly, and budgetary measures were also providing significant support to demand. Indications were that these policies were having some impact, though the full effects would take time yet to be seen," it said.
"Accordingly, members judged that maintaining the current stance of monetary policy for the time being would be consistent with fostering sustainable growth and low inflation, and would leave adequate flexibility to respond to developments as needed over the period ahead."
The minutes indicated some optimism over the state of the world's finances, particurlarly in the Asian-Pacific region.
Members of the board "took particular note of the strong recovery in Chinese industrial production and the pick-up in production in a number of east Asian economies, including Japan".
And while "the story was not as positive in the western advanced economies" (the US and euro area) the board noted there were some signs that the rate of deterioration in the US labour market had slowed.
Locally, it took note of improving conditions in the housing sector - increased building approvals, a rise in the number of first-home buyers purchasing newly constructed homes and a recent pick up in housing loan approvals for both repeat buyers and first-time buyers.
"Members were informed that the general improvement in conditions in credit markets had continued," the minutes said.
Rates left unchanged - but further cuts likely in 2009 - Predictions by brokers and economists that the RBA would leave the cash rate unchanged for the second consecutive month proved accurate following its meeting today.