The RBA has decided not to increase interest rates, keeping them at Interest rates remain unchanged at 4.75 per cent.
"The supply-chain disruptions from the Japanese earthquake and the dampening effects of high commodity prices on income and spending in major countries have both contributed to the slowing.", RBA Governor Glenn Stevens said in a statement.
"The banking and sovereign debt problems in Europe have also added to uncertainty and volatility in financial markets over recent months."
Experts say the bank may well keep interest rates at current levels for the rest of this year with almost every measure across the economy showing low levels of demand.
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"There is a possibility that they could well delay a rate increase until 2012," Australian Chamber of Commerce and Industry (ACCI) director of economics and industry policy Greg Evans told reporters on Tuesday.
He said recent data has shown weak retail spending, building approvals, credit growth, car sales and house prices.
"About every measure you look at across the Australian economy is showing signs of low levels of demand," Mr Evans said.
However, he did not believe the economy was heading for a recession with mining and engineering, and businesses directly linked to the mining boom remaining upbeat.
Mr Evans was releasing the chamber's survey of investor confidence for the June quarter, which showed business conditions had slumped to the lowest level in at least 13 years.
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