Australia's central bank left interest rates unchanged at 2.25% today, but gave a clear signal that further easing was on the cards to help drive down the dollar and spur the economy.
The Reserve Bank of Australia last month cut rates for the first time in 18 months, dropping its cash rate by 25 basis points to a historic low of 2.25% to help drive growth.
"At today's meeting the board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being," governor Glenn Stevens said.
"Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The board will further assess the case for such action at forthcoming meetings," he added.
The wait-and-see approach comes as a decade-long mining investment boom fades, with growth slowing, inflation low and unemployment at a more than 12 year high.
The RBA noted that commodity prices, such as for major exports iron ore and coal, had slumped in the past year, while growth in key market China was also slowing.
Amid fears that a fresh rate cut would inflame an already booming property market, the RBA noted that dwelling prices continued to rise strongly in Sydney but were more varied in other cities.
Balancing this concern, the bank has been keen to see the Australian dollar drop further from its historic highs of recent years.
It reiterated that the currency was "above most estimates of its fundamental value". "A lower exchange rate is likely to be needed to achieve balanced growth in the economy," it said.
Stevens said last month that the RBA was conscious that interest rate cuts could be less effective than in the past in summoning additional growth in demand.
Australia's central bank has already cut forecasts for 2015 economic growth and inflation and warned unemployment will likely rise as the economy transitions away from a mining investment boom.
