There was no interest rate cut today but the Reserve Bank of Australia has pointedly left its options open.
The cuts in interest rates and easing in the Australian dollar since the previous meeting would give economic growth a boost "over time", the RBA said after its board's monthly monetary policy meeting.
But it made it clear interest rates would be lowered again if necessary.
"The board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand," the RBA said in the statement.
The key for the interest rate outlook is the outlook for economic growth.
The RBA said growth had been "a bit below trend" over the past year and recent figures had been consistent with the RBA's view that it would continue like that "in the near term".
Whether and, if so, how quickly that below-average growth gives way to a normal pace of expansion is the bottom line for interest rates.
The longer the pickup is delayed, the more risk there will be of further rises in the unemployment rate.
The cut in the cash rate last month, to a half-century low of 2.75 per cent from 3.0 per cent, can be seen as a response to the RBA's realisation that the expected pickup was not happening on schedule.
The RBA now seems to be content to sit back awhile and see how things go.
"It (the RBA board) decided that the stance of monetary policy remained appropriate for the time being," the RBA said.
But the door is still open for a cash rate of 2.5 per cent or even lower, thanks to a benign outlook for inflation, which the RBA expects to stay in line with its 2 to 3 per cent target over the coming two or three years.
"The board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand," the RBA said.
The first test of the RBA's outlook will come on Wednesday, with the March quarter national accounts and their estimate of growth in gross domestic product.
Next week, the Australian Bureau of Statistics will also release the May unemployment figures.
But Housing Industry Association senior economist Shane Garrett was disappointed there wasn't a follow-up reduction after the surprise rate cut in May.
"A reduction in rates would certainly have been warranted," he said.
"Inflation is well within target, while economic activity is struggling in many important sectors like home building.
"A one-off cut in May without immediate follow-up in June simply adds to business and household uncertainty."
Retailers were also hoping for a further rate reduction, as the sector continues to deal with difficult trading conditions.
"We also need the right policy settings in place if retail - as Australia's largest private-sector employer - is going to be asked to pick up the slack as mining activity continues to shrink rapidly," Australian National Retailers Association chief Margy Osmond said.
1300HomeLoan broker network managing director John Kolenda says consumers remain "sceptical, concerned and cautious".
"Further rate reductions, and probably the change of (federal) government, are required to generate some confidence," he said in a statement.
Another mortgage broker, Loan Market, hopes commercial banks will independently cut lending rates.
"Cost-of-funding pressures have significantly eased from last year and out-of-cycle rate movements could be the next area of heated competition between lenders," Loan Market spokesman Paul Smith said.
Full text of RBA rates decision:
Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 2.75 per cent.
Information becoming available since the previous meeting is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year.
Commodity prices have declined from their peaks but, overall, remain at high levels by historical standards.
Inflation has generally moderated over recent months and monetary policy has been eased further in a number of countries.
Financial conditions internationally are very accommodative. Despite the recent rise in sovereign bond yields, funding conditions for sovereigns, well-rated corporates and most financial institutions remain very favourable.
In Australia, growth over the past year has been a bit below trend.
The outlook published by the Bank last month is for a similar performance in the near term and recent data are consistent with this.
The unemployment rate has edged higher over the past year and growth in labour costs has moderated.
Inflation has been consistent with the medium-term target and is expected to remain so over the next one to two years.
The easing in monetary policy over the past 18 months has supported interest-sensitive areas of spending and has been reflected in portfolio shifts by savers and higher asset values.
Further effects can be expected over time. The pace of borrowing has thus far remained relatively subdued, though recently there have been some signs of increased demand for finance by households.
The exchange rate has depreciated since the previous Board meeting, although, as the Board has noted for some time, it remains high considering the decline in export prices that has taken place over the past year and a half.
At today's meeting the Board judged that the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target.
It decided that the stance of monetary policy remained appropriate for the time being.
The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand.
