Australian central bank leaves rates on hold

Australia's central bank on Tuesday kept official interest rates at the record low 1.75 percent, but has left the door ajar for cut in August despite not explicitly mentioning an easing bias.

The decision was widely expected given the Reserve Bank of Australia's (RBA) rate cut by 25 basis points two months ago and the political uncertainty at home and abroad.

Though RBA governor Glenn Stevens had maintained a neutral bias in his last two policy statements, a slight dovishness was added to keep the door ajar for potential further policy easing.

"Further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate," Stevens said in a statement.

Stevens noted low interest rates had been supporting domestic demand and a lower Australian dollar since 2013 had helped to assist the economy to make necessary transition away from mining-led growth, but an appreciating exchange rate "could complicate this."

The continued below trend inflation was also noted, weighed by subdued labor costs and downward global cost pressures.

"The final paragraph of (Stevens') statement ... provides the necessary wiggle room to cut the cash rate in the likely event that the June quarter CPI is on the low side," Commonwealth Bank of Australia senior economist Michael Workman said.

The June quarter CPI figures are due for release on July 27. Endit