Australians have been spared another painful mortgage squeeze after the Reserve Bank decided to leave interest rates on ice for September.

Meeting on Tuesday, central bankers left the cash rate target at a decade-high 4.1 per cent – where it has been for three months in a row.

Delivering his last rate decision as RBA governor, Philip Lowe said easing inflation and economic uncertainties were behind the decision to pause.

“Interest rates have been increased by four percentage points since May last year,” Dr Lowe said in a statement after the meeting.

“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.”

The September pause was anticipated by most economists amid a growing consensus that rates will remain on hold for the remainder of 2023.

Two-thirds of experts surveyed by comparison firm Finder believe the RBA has finished its record-breaking hike cycle. It has added more than $1100 to monthly repayments on a $500,000, 25-year home loan since the first rise in May 2022.

But Dr Lowe has left the door open to further hikes in coming months.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks,” he said.

Indeed APAC economist Callam Pickering said what was likely an extended pause in interest rates had been driven by falling inflation.

“Australia continues to import lower inflation from abroad, with global inflation easing considerably,” he said.

“This has been partly offset by a depreciation in the Australian dollar.

“Over the past six months, the monthly measure of inflation has increased at just a 2.6 per cent annualised rate.”

Another rate pause will be welcome relief for millions of Australian homeowners and comes after rates of mortgage stress hit a record high in July, worsening a cost of living crisis that has also driven rents to soar.

Major forecasters are predicting interest rate cuts could be the next move for the RBA under new governor Michelle Bullock. She takes over from Dr Lowe as the boss later this month.

The first cuts are projected in early 2024, according to economists at the Commonwealth Bank.

ANZ , NAB and Westpac economists, meanwhile, think it will take until the second half of 2024.

The pause itself has been enough to help the property market return to growth in recent months, with prices rising across most major capitals.

But CoreLogic research director Tim Lawless said another pause in interest rates for September was unlikely to have a significant further impact on demand among property buyers.

“It may be too soon for a pause in the cash rate to have a significant impact on purchasing demand,” he said.

“Although housing values have trended higher in the past few months, the recovery trend is occurring across volume that remains slightly below the five-year average.

“A more robust recovery in housing market activity is likely to be constrained by high interest rates and affordability hurdles in the short-term.”