The Reserve Bank of Australia (RBA) stayed its hand on yet another cash rate rise today, leaving the June rate of 4.1% in place for another month.

Yet hard-hammered home owners barely dared celebrate after facing the same situation in April - only to be hit by a further rise in June which lifted the rate to its highest level in 11 years.

Today's announcement has also come after 12 cash rate spikes in 15 months.

So, why this second pause - and could such rate stays be a long-term possibility?

"Higher interest rates are working"

Yes, you read this right: RBA governor, Dr Phillip Lowe, was definitely more positive in his cash rate announcement today.

"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 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."

Lending Loop thought it was positive that Dr Lowe believes the balance between economic supply and demand will continue.

But we weren't so sure about his "some time" words, as they're the same as those in his April announcement when he said he would also pause rate rises - only to increase them in May.

Plus, without wanting to be too negative for our readers, Dr Lowe again pointed out today - as he has done since May - that inflation in Australia has passed its peak.

Yet he believes - again - that it is still too high and "will remain so for some time yet". 

Dr Lowe also remains determined to return inflation to the RBA's 2%-3% target rate - "and will do what is necessary to achieve that".

"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," he said.

Largely speaking - and beyond Dr Lowe's initial explanation on why the pause button was pressed today - his song remains the same as what it has been for months.

News to watch out for

Today's inflation comments from Dr Lowe come after the good news of the Australian Bureau of Statistics' (ABS) latest monthly CPI indicator, which revealed a sharp decline in the year to May (5.6%), following a 6.8% figure the month before.

CoreLogic also noted today that the ABS' quarterly inflation statistics for June will be released later this month.

"This outcome will be critical in determining whether there are more rate hikes ahead," executive research director, Tim Lawless said.

He added that a potential renewed growth in housing values could impact the RBA's August - and beyond - cash rate decisions.

"While the RBA has been clear that it doesn’t target asset prices, there is a risk that higher housing prices could keep inflation higher for longer, as homeowners feel wealthier and more willing to spend," Mr Lawless explained.

Mr Lawless said other points that could further impact the property market, include:

• Additional decline in already low consumer sentiment - "Historically, consumer sentiment and housing market sales have been closely correlated"
• Credit availability to equal less housing activity - "Lenders are less willing to lend on high debt-to-income ratios, high loan-to-income ratios or on smaller deposits"
• Possible progressive increase in mortgage arrears - although so far, "the majority of borrowers have kept on track with their mortgage repayments"

In good news for homeowners, Mr Lawless said Australia's very low unemployment rate should help to prevent a material blowout in mortgage arrears.

Plus, the country's very low supply of property could negate the rate spikes we're experiencing.

Mr Lawless said the number of properties advertised for sale is about 26% below the previous five-year average, while dwelling approvals continue to trend well below average levels.

"This low supply in the face of record net overseas migration and extremely tight rental conditions should be a key factor helping to offset the impact of higher interest rates," he said.

The RBA's next monthly cash rate announcement will be on Tuesday, August 1, 2023, at 2.30pm AEDT.