Australia's central bank kept its key interest rate unchanged on Tuesday as the board assesses the economic impact of its more than yearlong tightening cycle, while leaving the door open to future hikes.

The Reserve Bank held its cash rate at 4.1%, its second pause of the year, in a decision predicted by 19 of 32 economists surveyed by Bloomberg. The move will allow the board more time to reflect on the state of the economy, as well as the outlook and associated risks.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve," RBA Governor Philip Lowe said in a post-meeting statement. "The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that."

The Australian dollar declined as did the rate-sensitive three-year government bond yield.

The decision extends a series of staccato-like policy moves from the RBA: hiking in February and March, pausing in April, raising in May and June and then holding in July as it adjusts to volatile economic data. It contrasts with a more sustained tightening cycles by peers in the US and Europe, whose central bank chiefs recently said they still had ways to go in tamping down inflation.

Lowe has said the RBA is in data-dependent mode as it keeps a close eye on consumer spending, labor costs, business surveys and inflation. While goods inflation and household consumption are showing signs of easing, core prices remain above 6%, well in excess of the bank's 2-3% target. 

Source: Bloomberg