creamandcheese

The Reserve Bank has left official interest rates on hold at 4.75 per cent for the sixth straight month.

The decision was widely anticipated by interest rate watchers, with 21 out of the 22 financial institution economists surveyed by Bloomberg expecting no change in the cash rate target.

Many of these analysts are expecting the bank to remain on hold until the second half of the year, with August a widely-tipped month for the next move.

That is despite last week's official Bureau of Statistics inflation data showing a sharp 1.6 per cent rise in consumer prices during the March quarter - the highest quarterly jump in five years.

However, a private inflation survey released yesterday showed the pace of inflation eased in April, with a 12 per cent fall in fruit and vegetable prices offsetting an 11.3 per cent rise in March.

Many analysts have interpreted that as proof that high inflation early this year is mainly attributable to temporary cuts to fresh food supply caused by the Queensland floods and Cyclone Yasi.

Reserve Bank governor Glenn Stevens appears to agree, while sounding a note of caution about rising utility prices.

"Recent data on inflation show the effects of production losses due to the floods and Cyclone Yasi. The affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring," he noted in his statement outlining the reasons for today's rates decision.

"The bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead."

Mr Stevens did, however, warn that the fall in consumer prices which followed the financial crisis has probably finished, and inflation is now likely to be on the rise in the months ahead.

"Looking through these short-term movements, however, the recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course," he added.

"While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected."

The bank's board also considered the recent fall in house prices, and weakness in household borrowing as an offset against a fledgling recovery in commercial lending, and the boom in the commodities sector.

It also noted that rises in employment had eased in recent months, and that jobs growth was likely to be at a slower pace over the rest of the year.

Mr Stevens says that means the board will "continue to assess carefully the evolving outlook for growth and inflation" over the months ahead.

Macquarie's senior economist Brian Redican says it is a very balanced statement by Glenn Stevens.

"I think the statement does shift a notch maybe in the direction of tightening [monetary policy by lifting rates], but there's certainly no sign of panic or any indication that the Reserve Bank is about to embark on a very aggressive tightening period, as some people had been suggesting," Brian Redican told ABC News.

Mr Redican says the continuing strength of the Australian dollar, the current level of interest rates, and the prospect of deep cuts in next week's federal budget are all factors negatively affecting large sectors of the economy and putting downward pressure on inflation.

He says that makes it likely the Reserve Bank will wait until August, after the next official inflation figures are released in late July, before lifting interest rates again.

The decision to stay on hold, if followed by the major banks, will leave their standard variable mortgage rates in a range between a low of 7.67 per cent at National Australia Bank and a high of 7.86 per cent at Westpac.

The Australian dollar has hovered in a fairly narrow range just above 109 US cents before and since the data was released.