RBA keeps rates on hold again

The Reserve Bank has left the cash rate at a record low of 2.5 per cent for the ninth consecutive month, despite some encouraging signs of a pick-up in economic activity.

The decision to stay on the sidelines was widely expected by economists and financial markets.

Economists said the softer-than-expected reading of first-quarter inflation, which kept the rise in consumer prices within the RBA's target band of 2 to 3 per cent, had given the central bank some breathing room on when it might consider lifting the cash rate.

At the same time, analysts have said that expectations of a tight federal budget could see the Reserve Bank maintain its loose monetary policy settings and leave rates at 2.5 per cent for an extended period to continue stimulating the economy.

Financial markets have also wound back their rate hike expectations. While markets were pricing in a 88 per cent chance of a 25 basis points rate hike over the next 12 months in early April, they priced in a lower 52 per cent chance earlier on Tuesday, Credit Suisse data showed.

The unchanged rate came despite further signs of a gradual improvement in the economy as it transitions away from mining-led growth.

The latest ANZ survey on job advertisements, which was released on Monday and comes ahead of the Bureau of Statistics' April labour market report on Thursday, saw advertised positions in newspapers and online rise for the fourth consecutive month.

Economists said while it was still too early to call an end to a rise in the unemployment rate, the latest figures pointed a gradual improvement in the jobs market.

At the same time, analysts said while a 3.5 per cent fall in building approvals for March could signal a forthcoming slowdown in the housing boom, the outlook for the sector remained strong

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