The central bank kept interest rates on hold as expected at 4.35 per cent, keeping a hawkish tone with the warning" data have reinforced the need to remain vigilant to upside risks to inflation".
The bank also forecast underlying inflation would take longer wait to reach 2.6 per cent - just shy of the middle of the two to three per cent target, where the RBA is aiming for.
Today's welcome decision to keep interest rates on hold recognises that Australians are under pressure, as well as the significant progress we've made on underlying inflation, softness in our economy and the substantial uncertainty and volatility around the world — Jim Chalmers MP (@JEChalmers) #auspol #auseconAugust 6, 2024
Treasurer Jim Chalmers said measures in May's federal budget - such as $300 energy bill rebate for households - were still taking the edge off inflation, but admitted it would take time for it to return to below the three per cent target.
"There's nothing artificial about helping people with helping people with their cost of living pressures," he told ABC Radio on Wednesday.
"The Reserve Bank's near term inflation forecasts are better, not worse, and that's because of the design of our cost of living policies."
Despite global economic uncertainty after billions of dollars were wiped off the stock market, Dr Chalmers said there were no fears of a recession taking place.
"It's not our anticipation that we will see a recession here, but there is a lot of global economic uncertainty," he said.
"It's clearer now than ever, given the global economic uncertainty that we've anticipated through the course of this year, that we need to get the balance right."
Finance Minister Katy Gallagher said interest rates remaining hold was a relief for mortgage holders, but said it would still take time for inflation to moderate.
"Getting it just down that last little bit takes a bit more time, and that's certainly been the global experience," she told ABC TV on Wednesday.
"It's moderated significantly, but the last bit to get it back into the target range doesn't necessarily happen in a straight line."
Growth forecasts had also been bumped higher, reflecting stronger public demand and household consumption.
Moody's Analytics economist Harry Murphy Cruise said there was clearly "growing angst within the bank that inflation is digging in its heels".
"We're still of the view that it's more time, not more hikes that's needed to tame inflation; we expect the cash rate to stay where it is until February 2025," he said.
Market movements unlikely factored into Tuesday' call, Mr Murphy Cruise said, with the board more focused on June quarter inflation data.
Deputy opposition leader Sussan Ley said the forecast from the Reserve Bank showed there would still be difficult months ahead.
"There's been a reprieve for now, but it's not going to help with the rising prices that are hitting the pockets of every household and small business," she told Sky News.
'Wasteful spending by this government is adding to inflation and helping to create the problem."
Senator Gallagher said there was more work to do to bring inflation down.
"The budget isn't the only factor, and there are some of those other pressures, whether it be petrol prices or some supply costs, and those global impacts, that continue to have impacts on our economy," she said.
"Inflation's moderating, the hold of interest rates is welcome, but there's more work to do."
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