It marks the fourth consecutive month of no movement in the cash rate, giving mortgage holders some more time to breathe.

But the RBA said there was still “uncertainty surrounding the economic outlook”, with the pause on moving the interest rate to “provide further time to assess the impact of the increase in interest rates”.

In the 12 months to May this year, Australians were hit with four percentage points of rate hikes, leaving many scrambling to pay off their home loans.

The last rate rise was in July – at the time the 12th since May 2022 – as the Reserve Bank attempted to rein in inflation amid disappointing wage growth.

Today’s decision is Bullock’s first as RBA Governor, having taken over from Philip Lowe last month.

She said inflation in Australia had “passed its peak but is still too high and will remain so for some time yet”.

“Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late,” Bullock said.

“Rent inflation also remains elevated.

“The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025.”

The RBA board’s priority is to “[return] inflation to target within a reasonable timeframe” according to Bullock.

“High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality,” Bullock said.

“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.”

It comes after ANZ and Roy Morgan released their weekly consumer confidence data, which detailed confidence in South Australia rose. Nationally, the consumer confidence figure was up by 1.8 points to 78.2 points, but the index has now spent a record 31 straight weeks below the mark of 80.

The report found the increase this week was driven by improving levels of confidence about personal finances over the next 12 months as well as a more positive outlook on the long-term prospects for the Australian economy.

The decision to hold rates was “the correct one” according to Deloitte Access Economics’ Pradeep Philip, who said “businesses and households will breathe a collective sigh of relief in a slowing economy”.

“Although inflation was slightly higher in August than it was in July, that increase was driven by an increase in the cost of more volatile items like fuel, energy, and holiday travel. If you exclude these items, underlying inflation in the year to August was lower than it was in the year to July,” Philip said.

“Price inflation across these more volatile categories is being driven by supply-side pressures, like global energy prices. As we have been saying for months, increasing the cash rate is only good for reducing demand-side pressures like consumer demand.

“There is clear evidence of a slowing economy – with confidence waning, consumer spending weak, and the retail sector in the doldrums.”

Philip added that increasing interest rates in this environment “would have simply added to the economic risks facing the economy”.

“With supply side factors driving inflation, if we want to cool further price increases without tipping the economy over into recession while also addressing challenges like housing prices and climate change, we must prioritise productivity-enhancing macroeconomic reform,” Philip said.

“Looking ahead, the September quarter inflation figures due this month will weigh heavily on the next meeting of the RBA Board. All eyes will be on whether every inflation data point is a nail for the RBA interest rate hammer.”