Reserve Bank Governor Michele Bullock has vowed to “see the job through”, despite a bumpy path ahead as Australia battles stubborn inflation.

Speaking after Tuesday’s decision to leave the official cash rate at 4.35 per cent, a fourth consecutive pause, Bullock said the RBA board was aware some Australians were doing it tough.

“We have made progress here, and we’re not going to jeopardise that. The rise in interest rates that has been required to bring down inflation has been painful for many people. Inflation is, though … bad for everyone and we have to see the job through,” she said.

“We also know that there are households who are really struggling to make ends meet. These people don’t have a lot of extra savings, they might be working a second job, cutting back on discretionary items or making difficult decisions … These people are doing it very tough, and the board and I are very conscious of that.”

She said one outcome was that household consumption was weak, while the housing market remained tight.

“[In] bringing inflation down, we want to keep employment growing. This is the difficult path that we are trying to navigate right now,” she said.

“We believe that rates are at the right level to achieve this, but there are risks and at this stage the board is not ruling anything in or out. We must get inflation back to the target band, low and stable in the background.”

Australia’s official interest rates have not shifted since November, despite recent speculation that another hike could be on the way for borrowers who have already had to find an extra $1200 a month to pay the typical $500,000, 25-year loan after the string of hikes in the past two years.

On Tuesday, Treasurer Jim Chalmers hailed the latest Reserve Bank decision as “stability in difficult times”.

“Today’s RBA decision means when the board next meets it will be nearly eight months since interest rates last went up, providing stability in difficult times,” Chalmers tweeted shortly after the announcement.

“The budget’s major focus will be easing inflation in the near term and easing cost-of-living pressures.”

Chalmers will deliver the federal budget next Tuesday.

Tweet from @JEChalmers

Opposition treasury spokesman Angus Taylor said he had no doubt the Albanese government would keep spending.

“You have got a government that needs to be showing some restraint because I tell you who is showing restraint, it is Australian households, they have absolutely no choice,” he told the ABC.

“The way to get wages up is to get inflation down. That is the key, to have a strong, low-inflation economy and the government is failing to get inflation to where it needs to be.”

Heading into the RBA board’s meeting, there was broad consensus among forecasters that the central bank would opt for no change.

However, following stronger domestic and overseas inflation data, economists were on the lookout for a change in hints at future interest rate moves.

Updated forecasts released at the same time as the rates announcement show inflation is proving more stubborn than thought back in February, and the outlook for economic activity is a little softer for the rest of 2024.

Moody’s Analytics economist Harry Murphy Cruise said concerns about “sticky inflation” were valid.

“Australia is joining a growing list of economies proving that the final mile of bringing down inflation is the hardest,” he said.

“Inflation will ease from here, but progress will be slow.”

But Murphy Cruise said the RBA had more options than just lifting or lowering interest rates.

“Today’s statement by the board speaks volumes. The board has taken a slightly more hawkish tone this month, noting the risks posed by lingering inflation. They’ve vowed to be ‘vigilant to upside risks’, keeping the prospect of a future rate hike in play,” he said.

“Much of that is posturing. The threat of future rate hikes can sometimes be enough to dampen demand without the need to actually pull the trigger. Indeed, we think the most likely outcome is for rates to stay where they are until December.”

RSM Australia economist Devika Shivadekar agreed the RBA’s latest position was “a touch more hawkish”.

“The challenge for the central bank will be managing consumer weakness against price pressures in the coming months,” she said.

“Today’s decision aligns with our expectations, with inflation forecasts adjusted upwards, likely considering upcoming tax cuts and budgetary changes.

The central bank still expects inflation back within its target range of 2-3 per cent by December 2025. In the near term, however, price pressures are proving harder to budge.

Headline inflation has been revised up to 3.8 per cent in June this year, from 3.3 per cent at the last count. It is expected to remain there throughout  2024 before softening to 3.2 per cent by June 2025.

-with AAP