The Reserve Bank of Australia left the cash interest rates on hold at 1.75 per cent on Tuesday, although governor Glenn Stevens hinted at cuts ahead if inflation remains low.
With continuing signs of weakening local economic activity and growing concerns over the state of the international economy, the likelihood is increasing however of a cut in rates over coming months.
Economists say the central bank’s focus remains weak inflation, leaving the second-quarter consumer price index, released at the end of July, central to its next move. A surprisingly low first-quarter inflation read-out forced a 25 basis point cut, to 1.75 per cent, in May.
Most expect the June-quarter CPI to come in below the RBA’s 2 to 3 per cent target range.