As expected, the Reserve Bank of Australia has left interest rates on hold once again at the record low rate of 0.1%.
The RBA last lifted the cash rate more than 5 years ago.
The RBA board decided to maintain the cash rate target at 10 basis points, and the interest rate on Exchange Settlement balances at 0%.
"Inflation has increased sharply in many parts of the world," RBA Governor Phillip Lowe said.
He said inflation had also picked up in Australia, and a further increase was expected, but "growth in labour costs has been below rates that are likely to be consistent with inflation being sustainably at target".
Importantly the RBA board said, "The Board's policies during the pandemic have supported progress towards the objectives of full employment and inflation consistent with the target.
The Board has wanted to see actual evidence that inflation is sustainably within the 2 to 3 per cent target range before increasing interest rates. Inflation has picked up, and a further increase is expected, but growth in labour costs has been below rates that are likely to be consistent with inflation being sustainably at target.
Overcoming months, important additional evidence will be available to the Board on inflation and labour costs evolution. The Board will assess this and other incoming information as its sets policy to support full employment in Australia and inflation outcomes consistent with the target."
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