Australia's interest rate held at 1.5 pct for 33rd month

Reserve Bank interest rates: RBA meets to decide whether to cut cash rate – live

Lowe said a further improvement in the labour market is needed for inflation to be consistent with the target.

As of writing, the two-year yield is trading at 1.29%. The Australian dollar rose sharply on the decision climbing to 70.45 USA cents from 70.00 US cents just before the policy announcement. The Australian dollar strengthened and the stock market fell slightly on the decision.

"Given this assessment, the Board will be paying close attention to developments in the labor market at its upcoming meetings", the RBA said.

Westpac expect this move in the Australian Dollar to continue to push towards USD0.7060/80.

The Australian dollar spiked almost half a cent against the USA dollar.

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Australian economic momentum has slowed since the middle of past year and inflation has remained subdued.

With the jobless rate around 5%, that means there will be only a slow fall in unemployment over the next two years.

"The precise timing of these cuts will depend on the labour market".

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"It's clear that even a small change in the unemployment rate or a further drop in inflation could trigger a cut", Mr Cooke said.

But he remained bullish on the labour market, describing it as "strong" and maintaining that unemployment would stay around current levels of 5% before falling in time to 4.75%.

The RBA continues to expect inflation "to pick up", but to do so only "gradually".

The RBA revised down its growth forecast to 2.75 percent for 2019, from previous outlook of 3 percent.

For the Australian dollar as a whole, this may benefit in the coming months from what appears to be a relatively hawkish RBA. The RBA said in yesterday's statement: "In headline terms, inflation is expected to be around 2 percent this year, boosted by the recent increase in petrol prices", the RBA forecast. But if that looks like not happening, will the central bank cuts rates.

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital says his expectation was that the RBA would cut at this meeting particularly given the weak March quarter inflation outcome. In the February statement, the forecast was more general - "A further decline in the unemployment rate to 4¾ percent is expected over the next couple of years", The RBA said.

The cash rate has now been on hold at 1.5 per cent since August 2016.

"A stronger than expected result might delay cuts a little longer", he said.

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