Encouraging signs on inflation allowed the Reserve Bank to keep interest rates on hold for the third meeting in a row and soften its stance on the likelihood of more hikes.
The board came to its decision to keep interest rates on hold at 4.35 per cent on Tuesday after two days of reviewing the state of the economy and progress on inflation.
The widely expected move was accompanied by a subtle shift in language in the post-meeting statement to edit out an explicit reference to more interest rate hikes.
Instead, the board said it was "not ruling anything in or out", a pivot many economists read as less hawkish.
"We have changed the language, that's true, and that was in response to some data which has demonstrated to us we are still broadly on the path we thought we were on," RBA governor Michele Bullock told reporters after the decision on Tuesday.
"So we're not confident enough to say we can rule out further interest rate changes, but we do think that we are on the path to get ourselves back to inflation target within our forecast."
Thirteen interest rate hikes since May 2022 have hammered demand and brought economic growth to a crawl, weakening the inflationary pulse in the process.
And while inflation remains above the two to three per cent target range, it has been moderating more quickly than expected, cooling to 4.1 per cent in the December quarter.
Given the convincing progress on inflation, economists broadly agree the next rate move will be down but a question mark hangs over the timing of those cuts.
EY chief economist Cherelle Murphy said a rate cut by the third quarter was "far from a done deal in our view".
"As the governor said, the war is not yet won."
Ms Murphy said inflation had fallen but was still too high, and productivity growth - which needs to pick up or risk the price outlook - had been improving though it was still too early to call the rebound sustainable.
"Government spending remains elevated, and both the housing and labour markets are very tight," she added.
eToro market analyst Josh Gilbert said recent inflation data out of the United States suggested the last mile on inflation was not easy.
"And we’ve seen Federal Reserve rate cut expectations pushed back significantly in recent weeks and months," he said.
"Therefore, it’s not surprising that the board isn’t in any rush to ease away from their tightening bias."
Higher interest rates were clearly slowing the economy and "that is why a cut seems very likely at the start of the third quarter at the earliest", he said.
Treasurer Jim Chalmers said home owners and small businesses would appreciate the certainty of another month on hold.
"It gives us confidence that inflation is moderating in welcome and encouraging ways," he said.
Shadow Treasurer Angus Taylor said the steady call would be "cold comfort" to Australian families who were experiencing collapsing living standards.
"This is money they will never get back, and there is no sign the government is committed to reversing this situation," he said.
