Posted by 
The Reserve Bank of Australia (RBA) has kept interest rates on hold at 4.10 per cent as hundreds of thousands of borrowers nervously negotiate a looming "mortgage cliff".
Pausing rates for a second month running, the central bank said it was closely watching a slowing rate of inflation and an easing of consumer spending.
A "soft landing" requires the RBA to return inflation in Australia to the target band of between 2 and 3 per cent without hiking rates too dramatically, which could result in high unemployment and an economic recession.
READ MORE: Recession warning as RBA weighs up tomorrow's rates decision
Governor Philip Lowe, who is due to exit his role at the RBA in September, said the bank was aware of the "painful squeeze" interest rates were placing on some households.
"Many households are experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income," he said.
"In aggregate, consumption growth has slowed substantially due to the combination of cost-of-living pressures and higher interest rates."
Lowe said inflation in Australia was "declining" but "still too high" at 6 per cent and warned that more interest rate hikes would be likely.
"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 the data and the evolving assessment of risks," he said.
"In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.
"The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that."
READ MORE: Bleak reasons behind interest rates pause revealed
Speaking in parliament following the decision, Treasurer Jim Chalmers said today's pause will come as a "big relief" for Australians with a mortgage.
"This is a welcome reprieve for Australians already doing it tough enough. Australians are still under the pump, even as inflation moderates and even after this decision today," he said.
"Despite this there will be a sigh of relief around Australia."
Anneke Thompson, chief economist at CreditorWatch, said surprising data over the past 30 days prompted the RBA to hold its hand on moving the nation's cash rate target.
"The Reserve Bank of Australia today made the decision to again hold the cash rate at the current level of 4.10 per cent," Thompson said.
"A better-than-expected inflation rate over the June quarter, as well as slowing retail sales growth points to cooling economic conditions.
"And while the unemployment rate is still at record low levels, the forward indicators of employment conditions all point to a much tighter jobs market going forward."
READ MORE: Big changes are coming to the RBA. This is what it means for you
Richard Whitten, money expert at comparison website Finder, said the decision gives some much-needed breathing room for homeowners.
"Today's hold is welcome news for borrowers who have been bracing themselves for another hike," he said.
"Inflation is slowing down, which suggests that previous rate hikes are working."
Sign up here to receive our daily newsletters and breaking news alerts, sent straight to your inbox.
