The Reserve Bank has held interest rates at the historic low of 0.75 per cent.

Key points: Having cut rates three time this year, the RBA is more than likely on hold until at least February

Having cut rates three time this year, the RBA is more than likely on hold until at least February RBA assessed the economy as "little changed" in recent months

RBA assessed the economy as "little changed" in recent months The Australian dollar moved marginally higher after the decision

The decision to pause after the October cut was largely expected given a marginal improvement in unemployment and a modest uptick in inflation.

The futures market forecast a less than 10 per cent chance of a cut and no longer has a full 25 basis point cut priced in over its 18-month horizon.

While the recent unemployment and inflation data, as well as a rebound in house prices — particularly in Melbourne and Sydney — has taken some pressure off the RBA to move borrowing costs lower, the economy continues to grow below its long-term trend.

On Friday, the RBA is expected to once again cut its quarterly forecast for GDP growth, with the economy currently plumbing a decade-low expansion of just 1.4 per cent.

Economy 'little changed'

RBA governor Philip Lowe noted in his post-decision statement the outlook for the Australian economy is little changed from three months ago.

Loading

The RBA is forecasting GDP growth of around 2.25 per cent this year, gradually picking up to 3 per cent in 2021.

"The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices in some markets and a brighter outlook for the resources sector should all support growth," Dr Lowe said.

"The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending."

The RBA maintained the unemployment rate should remain steady, before finally falling below 5 per cent in 2021.

"The easing of monetary policy since June is supporting employment and income growth in Australia and a return of inflation to the medium-term target range," Dr Lowe said.

"Given global developments and the evidence of the spare capacity in the Australian economy, it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target."

Optimistic

Indeed Asia Pacific economist Callam Pickering said the RBA's forecasts were "little more than wishful thinking" and it will have little option but cut rates again early next year.

Loading

"If this week's retail figures were any guide, we are not out of the woods yet. Low wage growth and high household debt remain problematic for Australian households," Mr Pickering said.

Low wage growth and high household debt remain problematic for Australian households.

"The unemployment rate needs to drop below 4.5 per cent — currently 5.2 per cent — and the underutilisation rate needs to reach 12 per cent — currently 13.5 per cent — to push wage growth to 3 per cent … we are years away from achieving that.

"The sooner we get down to that level, the sooner the economy can get out of its rut," Mr Pickering said.

Maybe done

However, CBA chief economist Michael Blythe said it was possible the RBA was "done" with its cutting given the market's views have shifted significantly.

"Signs of progress on the trade war front, a tick down in the Australian unemployment rate, some positive RBA economic commentary, a chunky rise in house prices and an on consensus CPI outcome have moved the policy dial," Mr Blythe said.

"The shift has moved beyond the near term as well. The market is less happy with the idea that the next move is 'down'.

"The timing of any move has been pushed back into 2020 and the market is questioning whether the terminal rate will in fact be 0.5 per cent or lower," Mr Blythe noted.