INTEREST rates are likely to stay on hold next month, economists say, after the Reserve Bank revealed the decision to cut rates this month was "finely balanced".
According to minutes from the bank's meeting this month, there was little evidence of a "significant weakening" in Australia's economic health despite the problems offshore.
Economists say a rate cut is now less likely next month, but the central bank will consider further rate cuts later in the year.
Weakness in Europe and a slowdown in China were the main reasons for the cut in the official cash rate, the minutes reveal.
RBA directors voted to cut the base rate for successive months, by 25 basis points to 3.50 per cent.
The central bank also expressed concern about cutting again after slashing by 50 points in May, noting that the benefits of the first cut were yet to filter through the economy.
Analysts said yesterday that there was a "reduced chance of a July cut".
The RBA had cut this month in anticipation of further problems in Europe, they said.
HSBC chief economist Paul Bloxham said: "The RBA is probably a little ahead of the curve."
"But with global risks still tilted to the downside, we continue to expect that there may still be one more cut in the second half of 2012 - but it is a close call."
Official quarterly inflation figures due on July 25 will be crucial to the rates outlook, economists say.
The minutes show the board remains concerned at economic indicators suggesting consumers will continue to save rather than spend.
But with inflation at low levels, they decided to be cautious and make the cut.
