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The global economy still remains fragile with the eurozone being the main perpetrator, the RBA said in its board meeting this month, according to newly-released minutes.
The August meeting minutes show the RBA said inflation data was in line with expectations, but that uncertainty coming from overseas is affecting consumer sentiment.
However, it pointed out underlying inflation was towards the bottom of the target band.
"This reflected the lagged effects of the earlier appreciation of the exchange rate and weakness in demand in some parts of the non-resource economy, which had seen inflation of non-tradable prices ease in the first half of 2012 to its average over the inflation-targeting period," the bank said.
However, it also said inflation is expected to increase.
"Inflation was nonetheless forecast to be around the middle of the target range by late 2013 and to be consistent with the target over the medium term," the bank said.
"With inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the board judged that the stance of monetary policy remained appropriate."
This article first appeared at http://www.smartcompany.com.au/index.php.