“Inflation in Australia had declined more slowly than anticipated. Conditions in the labour market had eased by less than expected over prior months and were tighter than those consistent with full employment,” the minutes said.

“… Members agreed that it was important to convey that recent data and other information had signalled that the risks around inflation had risen somewhat. They also agreed that returning inflation to target remained the board’s highest priority.”

The board noted that consumer spending had been weaker than expected over the first three months of the year,while households had maintained a higher level of savings. Changes to household spending and saving were key factors in the bank’s outlook for inflation,it said.

Hospitality venues are vulnerable to those changes,and the latest business risk index from CreditorWatch found one in 13 hospitality businesses were at risk of failure over the next year due to the combined pressure of reduced spending from customers and rising cost pressures from higher energy bills and pricier ingredients.

CreditorWatch chief executive Patrick Coghlan said those conditions would continue to worsen in hospitality until there was a lift in consumer spending.

“And that is not going to happen until the impacts of one or two rate cuts filter through to households. We don’t anticipate that being felt until at least the second half of next year,” he said.

Economists said the hurdle for another rate rise this year was now much higher.

ANZ head of Australian economics Adam Boyton said while the Reserve Bank board might have had a reasonable discussion about raising interest rates,it appeared it was not going to be easily swayed by a handful of data points.

“We are left with the impression that any resumption of tightening from the RBA would require the board to be of the view that inflation was unlikely to return to the band over the next few years and that the hurdle to act is now higher than November’s risk management tweak,” he said.

AMP chief economist Shane Oliver had a similar view.

“The risk for interest rates in the next few meetings is still skewed to the upside,particularly if inflation comes on the high side again,” he said.

“However,with the economy weak,the labour market cooling and inflation likely to keep slowing,our base case is for the RBA to remain on hold ahead of rate cuts starting in November or December.”

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