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Borrowers have been granted another month of interest rate relief as the fight against high inflation appears to be going to plan.

The Reserve Bank left interest rates untouched at 4.1 per cent in September in a move that was almost universally expected.

The back-to-back months on hold follow four percentage points of increases since May last year.

In outgoing governor Philip Lowe's final post-meeting statement as head of the central bank, he said the latest data was consistent with its return to the two-to-three per cent target range by late-2025.

This data included monthly inflation numbers, which showed a convincing moderation in consumer prices from 5.4 per cent in June to 4.9 per cent in July.

The board also ingested slightly softer jobs market data and a subdued quarter for wage growth.

But the governor said inflation was still too high and stepped through now-familiar risks to the outlook, including services and rent prices.

The central bank also kept the door open to more increases if needed.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks," a post-meeting statement read.

Commonwealth Bank economist Belinda Allen said there was no catalyst for an interest rate hike in September and she didn't expect one for the rest of the year.

"At this stage inflation is tracking at or below the RBA's implied forecasts," she said.

The economist said September quarter inflation data could come in strong enough to trigger another hike, but she said it would need to come in "substantially higher" than the central bank's predictions.

Even with no more hikes, it remains unclear how the economy will fare under the tightening to date.

Dr Lowe singled out "significant uncertainties" hanging over the economic outlook, including the risk of persistent service inflation, a hard-to-read consumer sector and a rocky Chinese economy.

Treasurer Jim Chalmers said Australia was not immune to the slowing Chinese economy under pressure from ructions in the property market.

"We know that there are challenges ahead, but we are well placed to deal with them," Dr Chalmers told parliament on Tuesday.

Shadow treasurer Angus Taylor said he was deeply concerned about the prospects for Australia's economic growth.

"I want to see the whole government treat the economic challenges that Australians are facing as the first, second and third priority," he said.

Some economists remain concerned the RBA has tightened more than necessary.

AMP economist Shane Oliver said the risk of a recession next year was still "very high".

"Continuing to raise interest rates will only add to the already very high risk of unnecessarily knocking the economy into recession," he said.

"At the very least, the economy is likely to have slowed substantially by year end or early next year with unemployment starting to rise faster than the RBA is allowing for."

The September meeting was the last under the leadership of Dr Lowe, with deputy governor, Michele Bullock, taking on the top job later this month.

Dr Lowe is due to offer some final remarks on his time as governor during a speech on Thursday.

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RESERVE BANK KEEPS RATES ON HOLD

* The Reserve Bank board decided on Tuesday to keep the cash rate on hold at 4.1 per cent - the third such decision in a row after 400 basis points of hikes since May 2022.

* The board says the series of rate hikes is working to balance supply and demand in the economy, but holding steady will "provide further time to assess the impact of the increase in interest rates to date and the economic outlook".

* Inflation has passed its peak but is still too high, especially the cost of services and rent.

* The bank's central forecast is for CPI inflation to continue to decline and to be back within the two- to three-per cent target range in late 2025.

* Below-trend growth in Australia is expected to continue for a while.

* The unemployment rate is expected to rise gradually to about 4.5 per cent late next year.

* Wages growth has picked up over the past year, but is still consistent with the inflation target, provided productivity growth picks up.

* The outlook for household consumption remains uncertain, with many households experiencing a "painful squeeze" on their finances, while some are benefiting from rising housing prices and higher interest on savings.

* Globally, there is increased uncertainty about the outlook for the Chinese economy because of ongoing stresses in the property market.

* More tightening of monetary policy may be needed to ensure inflation returns to target in a reasonable time, but that will depend on the data and the ongoing assessment of risks.

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Anthony Albanese will look to bolster ties with regional allies in Southeast Asia as he prepares to meet with leaders at the ASEAN and East Asia summits.

The prime minister will on Tuesday fly to Indonesia before attending both summits in Jakarta.

The visit to Indonesia will be the first part of his nearly week-long trip to Asia, that includes visits to the Philippines and then India for the G20 Summit in New Delhi.

The trip to Indonesia includes the prime minister launching Australia's Southeast Asia economic strategy to 2040 - the plan for boosting economic ties and with regional allies and two-way trade.

"This is a most substantive piece of work ever done about Australia's relations when it comes to our economic future with Southeast Asia," Mr Albanese told parliament.

He said the strategy - which covers agriculture, resources , renewable energy and education among other sectors - would boost Australia's prosperity and lift living standards across the region.

The strategy was developed by former banker Nicholas Moore in consultation with business leaders and academics.

"I will announce tomorrow the first steps we are taking to implement the strategy," Mr Albanese said.

Australian critical minerals are being widely sought as nations in the region seek to decarbonise.

Educational services are also considered to be world-class.

While in Indonesia for both summits, Mr Albanese will hold talks with Indonesian President Joko Widodo, as well as one-on-ones with Canadian Prime Minister Justin Trudeau and leaders from Malaysia, East Timor and Laos.

President Joe Biden is not attending the East Asia Summit, with Vice President Kamala Harris to represent the US.

Chinese President Xi Jinping will also skip the East Asia Summit as well as the G20 Summit.

Regional security and tensions in the Indo-Pacific region are set to dominate talks at the summits in Jakarta.

Australian Strategic Policy Institute analyst Gatra Priyandita said the emphasis on ASEAN was crucial for Australia to maintain its strategic focus in the region.

"Anthony Albanese's attendance shows Australia is committed to multilateralism in relation to ASEAN and ASEAN centrality," he told AAP.

"There's a longstanding argument that ASEAN loses out to regional players (as a forum), and at least the prime minister is trying to address that gap."

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Interest rates are broadly tipped to stay on hold for a third month in a row in September, but the possibility of more hikes is still alive.

The Reserve Bank board is due to meet on Tuesday afternoon for its monthly cash rate decision.

In August, the central bank opted to keep interest rates paused for the second consecutive month.

The back-to-back months on hold followed four percentage points of increases that have piled pressure on borrowers.

A convincing slowdown in the monthly consumer price index, sinking to 4.9 per cent in July from 5.4 per cent in June, has fuelled much of the optimism for another hold in September.

Signs of softening in the job market and wages tracking sideways have also added to the case for no change.

Judo Bank economist Warren Hogan said inflation was moderating in line with the RBA's forecasts, giving the board breathing space to sit back and continue monitoring in September.

But he told AAP it was still "way too early to be popping champagne corks", with the relative heat of the economy his key concern.

While economic growth is slowing, Mr Hogan warned that softness would need to stick around until next year to allow demand to get back into balance with supply, and inflation to return to the two to three per cent target.

He said robust retail sales numbers and strong business investment were indicators of a resilient economy.

"I personally think where we're probably one rate hike short of the level that they could be comfortable sitting on right through next year," Mr Hogan said.

Westpac economist Bill Evans was also confident the RBA would hold steady at the September meeting.

He said the central bank had missed its chance to take out more insurance against inflation last month.

"Going forward from here, the evidence around an ongoing weak economy and slowing inflation will encourage the board to extend its pause through to the end of the year and into 2024," Mr Evans said.

The improving odds of an extended pause appear to be easing consumer nerves, with confidence levels reaching their highest point since April.

The weekly survey from ANZ and Roy Morgan increased a modest 0.6 points to 78.7.

Despite the improvement, the gauge remains well below long-run averages.

While interest rates will dominate the economic agenda this week, Australia will also get its update on economic activity for the June quarter on Wednesday,

Balance-of-payments data, which has implications for the national accounts figures, revealed a shrinking trade surplus in the June quarter as the price of key export commodities dived.

Australia's current account surplus fell sharply by $4.8 billion to $7.7 billion, according to the Australian Bureau of Statistics, down from the revised March quarter 2023 surplus of $12.5 billion.

The terms of trade fell 7.9 per cent in the June quarter.

The balance on goods and services is expected to contribute 0.8 percentage points to the quarterly GDP movement.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said this was a very strong contribution.

"This should ensure GDP growth will be positive in the June quarter, despite the growing headwinds to domestic demand growth," he said.

The ABS also released public sector finance data, another input into GDP.

The general government net operating balance rose $25.8 billion to $32.5 billion, with total public demand expected to contribute 0.5 percentage points to the quarterly change in GDP.

© AAP 2023