RBA leaves cash rate at 2.25%

The Reserve Bank of Australia has left the cash rate unchanged at 2.25 per cent, after cutting it by 25 basis points in February.

RBA governor Glenn Stevens said the economy was still growing at a below trend pace and the Australia dollar was still too high, but it was appropriate to hold the cash rate steady for the time being after last month's reduction.

"Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target," he said.

"Commodity prices have declined over the past year, in some cases sharply. The price of oil in particular has fallen significantly. These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply.

"The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates."

Mr Stevens said financial conditions were very accommodative globally, with long-term borrowing rates for several major sovereigns at all-time lows over recent months.

"Some risk spreads have widened a little but overall financing costs for creditworthy borrowers remain remarkably low," he said.

"In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak.

"As a result, the unemployment rate has gradually moved higher over the past year. The economy is likely to be operating with a degree of spare capacity for some time yet. With growth in labour costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate."

QWest Paterson chairman Warwick Hemsley said the RBA's decision was disappointing but came as no surprise, and believes further rate cuts in April or May were more likely.

"We are hoping that the RBA would remain on the front foot and cut rates a further 25 basis points this month to help steady the market and give it a bit of confidence," Mr Hemsley said.

"Unemployment rates continue to climb, consumer confidence remains low and the Perth property market in particular is stagnant.

"The WA economy is struggling to adjust to post-mining boom conditions and we require the property market and construction industries to pick up some of the slack in order to stimulate positive activity."

He said a further cut in rates would go some way to achieving that outcome.