The RBA kept the target cash rate at 1.5 per cent, as expected by all 25 economists polled by Bloomberg, and reiterated low rates continue to support Australia's economy.
"Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual," governor Philip Lowe said.
Lowe noted Westpac's decision to raise its variable mortgage rate 14 basis points last week saying "some lenders have increased mortgage rates by small amounts" but underscored "the average mortgage rate paid is lower than a year ago."
Ross Weston, a senior trader at Kiwibank said the decision was "about what they didn't say," in that it didn't step up its language despite Westpac's move and it still expects inflation and employment to rise gradually. "So, no dovish tilt from the RBA... yet."
Paul Dales, chief Australia and New Zealand economist for Capital Economics said the RBA "largely ignored the raft of other news in the past month (flat retail sales, weak capex, falling building approvals, declining house prices and rising mortgage rates) that have surely weakened the economic outlook a bit."
Meanwhile, in New Zealand, investors are now pricing a 50 per cent chance for a rate cut within the next 12 months, something that capping gains in the kiwi. Weston said the local currency is stuck in the middle of a 65-to-67 US cents range.
The kiwi rose to 51.29 British pence from 51.07 pence yesterday and traded at 56.84 euro cents from 56.90 cents yesterday.
The local currency edged up to 73.31 yen from 73.26 yen yesterday and fell to 4.4986 Chinese yuan from 4.5145 yuan. The trade-weighted index was at 71.55 from 71.66.
New Zealand's two-year swap rate rose 1 basis point to 1.97 per cent. The 10-year swap was unchanged at 2.80 per cent.
