The Reserve Bank has surprised economists by deciding to keep interest rates on hold, with moderate growth and uncertain global conditions cited.
The cash rate will stay at 4.5 per cent for the fifth consecutive month.
The rise was a shock to the market, and the Australian dollar fell on news of the announcement.
Macquarie Group senior economist Brian Redican says the decision came as a real surprise given that the Central Bank had primed markets for a rate hike.
RBA Governor Glenn Stevens said, however, rates could still rise in the near future.
"If economic conditions evolve as the Board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target. "
Warning to government: Hockey
Opposition treasurer Joe Hockey says today's statement on rates contains a warning for the federal government to stop spending like drunken sailors.
Hockey says the interest rates Australians are paying on their credit cards, small business loans and standard variable home loan are higher than the average rate under the former
coalition government.
He's called on the government to make the hard decisions about it's own budget and get spending down to take the upward pressure off.
Banks warned
Australia is the only major Western country to escape recession during the financial crisis, and rates were raised six times from last October - off five-decade lows -before pausing in May.
The extended pause comes despite enviable 3.3 percent annual growth and 5.1 percent unemployment, compared to 10 percent in the eurozone and the United States' 9.6 percent, buoyed by strong resources exports to Asia, AFP reports.
The TD Securities Melbourne Institute Monthly Inflation Gauge released on Monday appeared to show inflationary pressures easing during the past three months, but more numbers are released in November.
The banks, meanwhile, were earlier put on notice by the federal government not to lift rates if the official rate went up.
Federal Treasurer Wayne Swan said he didn't believe there'd be any justification for banks to increase rates above the official Reserve Bank decision.
Redican says he does expect some of the big banks to begin making noises about raising rates independently of the RBA.
