Following three consecutive rate rises, the central bank's monetary policy board voted unanimously to leave the cash rate steady at 4.35 per cent on Tuesday.
The decision was anticipated by the majority of economists and financial markets.
But the question now is whether it heralds the end of the bank's hiking cycle or is merely a pause before the next move upwards.
While inflation remained too high, financial conditions were more restrictive than at the start of the year and the economy was slowing, the board said in its accompanying statement.
Therefore, it was appropriate for the bank to pause and assess how the previous interest rate rises and the oil supply disruption will impact the economy.
"The board remains focused on ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through," the statement said.
"To achieve this, growth in demand needs to slow to reduce capacity pressures and help bring inflation back to target."
The odds of a rate hike lengthened following softer-than-expected economic growth figures, a jump in the unemployment rate and better-than-forecast inflation figures since the previous rate meeting in May.
Added to the list of considerations for the Reserve Bank was a federal budget which has already compounded a housing market slowdown thanks to proposed curbs to property investor tax breaks.
Economists have revised down home price growth forecasts, with ANZ now expecting a nationwide housing downturn in 2026 and 2027.
Questions over a tentative Iran peace deal also remain.
While oil prices were easing in response, supply issues will take some time to resolve, the RBA board said.
Financial markets were pricing in about a one-in-two chance of one more rate rise in 2026 ahead of the meeting.
HSBC chief economist Paul Bloxham predicts an extended hold from here, before the RBA begins cutting rates in 2027.
The RBA's three rate hikes so far in 2026 and the impact of the Iran war had likely already sent Australia into a downswing, he said.
"We're quite likely to see a fall in GDP in the second quarter," he told Sky News.
"The main message is growth's going to be weak for a while; it has to be. I mean, you cannot really get inflation down from where it is ... back to 2.5 per cent in the medium term without the economy having a downturn."
Treasurer Jim Chalmers said it was a welcome reprieve for millions of Australians with a mortgage.
"It doesn't make life any easier for people, but it doesn't make life harder either," he told reporters in Brisbane.
While all four big banks predicted a hold prior to the meeting, Westpac was the only one still forecasting more hikes this year.
Cost pressures were still coming through the pipeline strongly, Westpac senior economist Pat Bustamante said.
A survey of businesses by Westpac and the Australian Chamber of Commerce and Industry showed firms were facing a growing squeeze on both costs and demand in the March quarter.
It demonstrated the dilemma for the RBA, working against two opposing forces, Mr Bustamante said.
"On the one hand, we're seeing activity stall," he told reporters in Canberra.
"But at the same time we're seeing cost pressures remain elevated and expectations of future cost pressures are also high amongst the manufacturing sector."
Attention now turns to governor Michele Bullock's post-meeting press conference, as traders look for clues as to the RBA's next move.
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