Rates stay on hold at 2.75 per cent

THE Reserve Bank has left the door open for future rate cuts but decided to leave the cash rate on hold at 2.75% at its June meeting.

RBA Governor Glenn Stevens said in a statement rate cuts during the past 18 months were having the desired effect and predicted it would continue.

Mr Stevens said borrowing remained "relatively subdued", although there were encouraging signs of increased demand for finance.

He noted the Australian dollar had weakened since the May RBA meeting, although it remained high, and predicted growth would increase "over time" in line with inflation targets.

"It decided that the stance of monetary policy remained appropriate for the time being.

The board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand," Mr Stevens' statement read.

Almost every mainstream economist had predicted there would be no change to the cash rate after the RBA's surprise 25 basis point cut last month.