Received

Australia's central bank has left interest rates unchanged at 3.6 per cent in April as the economy shows signs of cooling off.

The decision will give mortgage holders breathing space, having endured 10 interest rate hikes in a row that have added hundreds of dollars to the costs of servicing a mortgage.

But the Reserve Bank has given itself space to hike again, with governor Philip Lowe flagging that "further tightening of monetary policy may still be needed".

"The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty," he said.

"In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market."

While the RBA has opted to keep interest rates on hold to allow it to observe the impacts of its handiwork so far, another hike was firmly on the cards as the board sat down for its most challenging rates decision since it started lifting rates last May.

Economists were divided on the non-conclusive data released ahead of the April board meeting, including signs of strong business conditions and ongoing tightness in the labour market.

But while these data sources pointed to resilience in the economy, weaker-than-expected inflation and flatlining retail spending suggested the slowdown was already underway.

EY chief economist Cherelle Murphy said the Dr Lowe's accompanying statement pointed to a "hawkish pause".

"In other words, it's pausing for now, but it's certainly not saying 'relax, we're done'," she told ABC News.

Ms Murphy said the RBA was likely reassured by weakening inflation - sinking from 7.4 per cent annual growth in January to 6.8 per cent in the 12 months to February - but the tight labour market was likely still cause for concern.

"And there was a little bit of signal in the housing market, that things have actually gone the wrong way in the sense that housing prices went up in March," she said.

Spiking oil prices driven by the oil cartel's decision to cut production could also feed back into higher petrol prices and household inflation expectations.

"But at least for the moment, (the RBA board) is happy to see how last year's rate hikes and those at the beginning of the year flow through to the real economy," Ms Murphy said.

Treasurer Jim Chalmers said the decision to keep the cash rate on hold would offer relief to many Australians but cost of living pressures were still hurting households.

"That's why the costs of living are the primary focus of our economic plan and the upcoming budget," he said.

Finance Minister Katy Gallagher said the government expected inflation to come down over the next 12 to 18 months and would seek to reduce inflation pressures in the May budget.

"We're absolutely focused on not making the inflation problem worse ... we are looking at spending restraint," she said.

© AAP 2023

Homebuyers are being warned to brace for more mortgage misery in the months to come despite being spared an 11th interest rate rise in row.

The Reserve Bank on Tuesday left interest rates unchanged but has given itself wiggle room to hike again if needed.

The decision will give mortgage holders breathing space after enduring 10 consecutive interest rate increases, adding hundreds of dollars to the cost of servicing a mortgage.

While the RBA kept interest rates on hold at 3.6 per cent, the hiking cycle might not be over after governor Philip Lowe flagged that further tightening of monetary policy could well be needed.

"The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty," he said.

Dr Lowe also gave a nod to banking instability in the US and Sweden, which he said was expected to lead to tighter credit conditions and weaker economic growth despite Australian banks' strength.

While the RBA opted to keep interest rates on hold to allow it to observe the impacts of its handiwork, another increase was firmly on the cards.

EY chief economist Cherelle Murphy said Dr Lowe's accompanying statement pointed to a "hawkish pause" and reflected the non-conclusive data observed since the last meeting.

"In other words, it's pausing for now, but it's certainly not saying 'relax, we're done'," she said.

Ms Murphy said the RBA dialled back its conviction about future rate rises in April, switching to indicating further tightening of monetary policy "may well" be needed from "will" be needed in its March statement.

She added the central bank was likely reassured by weakening inflation - which sank from 7.4 per cent annual growth in January to 6.8 per cent in the 12 months to February - but the tight labour market was likely still cause for concern.

Ms Murphy said spiking oil prices driven by OPEC's decision to cut production could also push inflation higher and a worryingly early turnaround in home prices might weigh on the next decision.

Quarterly inflation data, due on April 26, will be the key piece of data for the RBA to digest before its next meeting in May.

Finance Minister Katy Gallagher said the government expected inflation to come down during the next 12 to 18 months and it would seek to reduce inflation pressures in the May budget.

"We're absolutely focused on not making the inflation problem worse ... we are looking at spending restraint," she said.

Shadow treasurer Angus Taylor said the government could be doing a lot more to help the RBA return inflation back to within its two-three per cent target band.

"This government's talking a big game on restraint, but we haven't seen it," he said.

Mr Taylor said families and businesses competed with the government to borrow money, which drove up interest rates and inflicted more pain on Australian households.

"We want to see a budget coming up in May where the government shows spending restraint and avoids the usual Labor temptation of adding taxes," he said.

© AAP 2023

Australia's central bank has left interest rates unchanged at 3.6 per cent in April as the economy shows signs of cooling off.

The decision will offer welcome relief for mortgage holders, who have endured 10 interest rate hikes in a row that have added hundreds of dollars to the costs of servicing a mortgage.

Reserve Bank governor Philip Lowe said further tightening of monetary policy may still be needed.

"The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty," he said.

"In assessing when and how much further interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market."

While the RBA has opted to keep interest rates on hold to allow it to observe the impacts of its handiwork so far, another hike was firmly on the cards as the board sat down for its most challenging rates decision since it started lifting rates last May.

Economists were divided on the non-conclusive data released ahead of the April board meeting, including signs of strong business conditions and ongoing tightness in the labour market.

But while these data sources pointed to resilience in the economy, weaker-than-expected inflation and flatlining retail spending suggested the slowdown was already underway.

© AAP 2023