RBA leaves interest rates on hold at Philip Lowe's last stand

As widely tipped by markets and economists, the central bank board decided to keep the official cash rate at 4.1 per cent amid evidence that inflation is easing and economic activity is slowing.

In a prepared statement, Dr Lowe said recent economic data was "consistent with inflation returning to the 2 to 3 per cent target range over the forecast horizon".

"Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation," the governor said.

But he warned there remained "significant uncertainties" about the outlook, including regarding the slowdown in services inflation, the size of wage gains, the strength of consumer spending and prospects for the Chinese economy.

Dr Lowe flagged that the Reserve Bank remains ready to raise rates if necessary, cautioning that "some further tightening of monetary policy may be required".

National accounts due out on Wednesday are tipped to show the economy expanded by a soft 0.3 per cent in the June quarter, dragging the annual growth rate down to around 1.7 per cent.

Treasurer Jim Chalmers told parliament that it was clear the higher interest rates was "impacting our economy".

He said the national accounts would reflect this: "As these higher rates take a toll on households, they're also taking a toll on the economy".

Despite the slowdown, the unemployment rate remains near a 50-year low, suggesting Dr Lowe and the RBA are on track to achieve their goal of dragging inflation down without triggering widespread job losses.

The governor, who will deliver his final public speech in the role on Thursday before calling an end to his 43-year career at the central bank on September 17, said the current period of below-trend growth "is expected to continue for a while".

But the bank was reassured that inflation expectations and wage gains have remained moderate, he added.

Opposition treasury spokesman Angus Taylor said even with the rate pause the pressure on families were "very, very real and very, very painful".

Insight Investment portfolio manager Harvey Bradley said it was becoming increasingly apparent the central bank thought it had raised interest rates enough.

Mr Bradley said every meeting will be "live" but he expected rates to remain on hold for an extended period.

"The risks for growth remain to the downside but the risks for inflation remain to the upside [but] we expect the RBA will be on hold for an extended period until they can be confident inflation has returned to their target on a sustainable basis," he said.

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But Deloitte Access Economics partner Stephen Smith said the central bank had pushed the economy into a precarious position.

Mr Smith said the national accounts were likely to show the country had experienced a per capita recession for the past 12 months, underlining the need for "bold, productivity-enhancing fiscal policy and economic reforms".

The Reserve Bank is wary that rising house prices may spur a lift in demand, delaying the decline in inflation.

But CoreLogic research director Tim Lawless said the property market recovery would be constrained by high interest rates and affordability issues.

"While a pause in the cash rate may gradually instill more confidence in the market, this is still very much an uncertain and thinly traded upswing," Mr Lawless said.