Interest rates will remain on pause for a third straight month in September as inflation eases.

The Reserve Bank made the decision at a meeting on Tuesday, with the cash rate to stay at a decade-high 4.1 per cent, which is where it has been since the last hike passed down in June.

RBA governor Philip Lowe – delivering his final rate decision as central bank boss – said that while inflation is still well above the target band it is now falling as the effects of higher rates bite into household budgets.

“In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month,” he said in a statement on Tuesday afternoon.

“This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.”

The September pause was anticipated by most economists amid a growing consensus that rates will remain on hold now that the economy is slowing and price growth is easing rapidly.

Two-thirds of experts surveyed by comparison firm Finder believe the RBA has now finished its record breaking hike cycle, which has seen more than $1100 added to monthly repayments on a $500,000, 25-year home loan since May 2022.

But Dr Lowe is still leaving the door open to further hikes in coming months.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks,” he said.

Another pause is welcome relief for millions of Australian homeowners and comes after rates of mortgage stress hit a record high in July, worsening a cost of living crisis that has also seen rents soar.

Major forecasters are now predicting interest rate cuts could be the next move for the RBA under new governor Michelle Bullock, who will take over from Dr Lowe as the boss later this month.

The first cuts are projected in early 2024, according to economists at the Commonwealth Bank.