The Reserve Bank of Australia has kept the nation's interest rates unchanged at the historic low of 0.10 per cent.
Members of Australia's central bank made the decision during a meeting this afternoon.
"The Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the three-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program," RBA governor Philip Lowe said in a statement.
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"The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven.
"While there are still considerable uncertainties regarding the outlook, the central case has improved. Global trade has picked up and commodity prices are mostly higher than at the start of the year. Inflation remains low and below central bank targets."
Mr Lowe said while the economic recovery in Australia is well underway and is stronger than expected, wage and price pressures are subdued and are expected to remain so for some years.
"It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target," he said.
"In the short term, CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions.
Looking through this, underlying inflation is expected to remain below 2 per cent over the next few years."
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What it means for Australia's property market
Mr Lowe also noted the recovery of Australia's housing market, in particular, pricing.
"Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers. In contrast, investor credit growth remains subdued," he said.
"Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."
RateCity.com.au research director Sally Tindall said the RBA's decision was helping facilitate the ultra-low fixed rates, in part, via its term funding facility, which allows banks to borrow money at a three-year fixed rate of 0.10 per cent.
"Over the last month, the majority of one- to three-year fixed rate changes have been cuts, not hikes, as lenders make the most of the low-cost funding available," Ms Tindall said in a statement.
"However, in the last month the majority of four-year fixed rates changes were in the opposite direction as some banks start to factor in a likely rise to the cash rate in 2024 and the end of the RBA's term funding facility on 30 June this year."
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