The central bank has dampened hopes of an interest rate cut any time soon, telling households it's keeping its options open because the war on inflation hasn't been won.
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"Nothing's in, nothing's out," Reserve Bank of Australia Governor Michele Bullock said during her first post-board meeting media conference when asked about the likelihood of hikes or cuts.
Board members decided to leave the cash interest rate steady at 4.35 per cent on Tuesday after the bank's first two-day meeting, as was widely expected.
With encouraging progress on inflation logged in December, markets and economists had switched focus from the likelihood of more interest rate hikes to the timing of cuts.
Yet Ms Bullock said the central bank was dealing with "broadly balanced" risks tilted towards, on one hand, a hard landing for the economy, or on the other, lingering inflation.
"We're looking for data which convinces us and helps us to be reassured that inflation is coming back to target within that time frame," she said.
The press conference - a new edition to the post-meeting regime aimed at improving monetary policy transparency - fleshed out communications in a statement issued by the board.
"Encouraging signs" were highlighted but the board "remains highly attentive to inflation risks".
Uncertainty hanging over the Chinese economy was flagged, as well as risks stemming from the conflicts in Ukraine and the Middle East.
Services price inflation could also prove persistent in Australia, as it has elsewhere.
The board noted it had declined at a more gradual pace than goods and in line with the RBA's earlier forecasts.
EY chief economist Cherelle Murphy said the board remained "rightly hawkish" given inflation was still high and price pressures had not evaporated.
"The message from the governor today was clear: despite the mortgage pain being felt by many in the community, the Reserve Bank will remain vigilant in the fight against inflation," Ms Murphy said.
She said markets were probably too optimistic to be pricing in a 25 basis point rate cut by September given inflation risks.
The Organisation for Economic Co-operation and Development warned central banks not to rush into rate cuts in an economic outlook update released on Monday.
The RBA has also revised its inflation forecasts down but still expects it will be back within its target range by the end of 2025 and around the midpoint in 2026.
The RBA sees inflation falling to 3.3 per cent by June this year before easing very gradually to 2.8 per cent - within the two to three per cent target range - by December 2025.
Gross domestic product forecasts were also revised down, which Ms Murphy said reflected a weaker outlook for consumer spending.
Consumers have been responding to tighter financial conditions by reining in their spending, with retail volume data for the December quarter from the Australian Bureau of Statistics particularly weak when accounting for population growth.
Australian Associated Press
