The Reserve Bank has held interest rates in July as it awaits fresh data on inflation, delivering a much-needed reprieve to Australian families.

At its meeting on Tuesday, the RBA board left its cash rate target on hold at a decade-high 4.1 per cent –  the second such pause since April.

RBA governor Philip Lowe said the pause would give central bankers more time to assess incoming economic data and determine whether further rate hikes would be needed to ensure inflation fell to target by mid-2025.

“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Dr Lowe said in a statement published on Tuesday afternoon.

“In light of this and the uncertainty surrounding the economic outlook, the board decided to hold interest rates steady this month.

“This will provide some time to assess the impact of the increase in interest rates to date and the economic outlook.”

Finance Minister Katy Gallagher said the July pause would be “welcome news” for households struggling with more than a dozen hikes since the RBA began raising rates in May 2022.

Economists were split on whether the RBA would pause in July or hike again and take the cash rate to a 15-year high 4.35 per cent.

Such a move would have added another $78 to monthly repayments on a typical $500,000, 25-year home loan.

The pause will spare home owners that increase, though many are still paying more than $1000 more a month thanks to hikes since May 2022.

Shadow Treasurer Angus Taylor said there would be “more pain in the pipeline” as he pointed out “there is a lot of inflation out there”.

APAC economist Callam Pickering said that while the RBA had held rates in July, home owners shouldn’t expect an end to increases.

He said central bankers were particularly worried about the “stickiness of inflation” and wouldn’t hesitate to raise interest rates again to curb prices.

“We believe that the RBA will maintain a tightening bias until inflation shows signs of clear moderation, particularly with regards to service sector or non-tradables inflation, or significant cracks appear in the Australian economy,” Mr Pickering said on Tuesday.

CoreLogic research director Tim Lawless said the RBA had “kept the door open for a hike in August”.

“The June quarter inflation outcome, to be released late this month, will be critical in determining whether there are more rate hikes ahead,” he said.

Dr Lowe said on Tuesday that further rate hikes could still be on the horizon, adding weight to earlier major bank forecasts that the cash rate target will rise again to 4.6 per cent during August.

“The board remains alert to the risk that expectations of ongoing high inflation will contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment,” he said.

But the path for rates, Dr Lowe reiterated, was not pre-set and could change based on incoming data on the jobs market and all-important June quarter inflation figures slated for July 26.

The RBA wants to see signs that price growth is easing fast enough to return annual inflation from 7 per cent in the March quarter to the 2 to 3 per cent target band by midway through 2025.

Dr Lowe said in June that this strategy could be derailed by rising wages growth, which will be consistent with easing price growth only if productivity growth returns to pre-pandemic levels.