Weak spending, wages still worry RBA

The RBA has downgraded its inflation forecast for this year

Reserve Bank downgrades inflation outlook, with no rate hike in sight

The Aussie remains uninspired by the RBA's Monetary Policy Statement.

At 1233 GMT, the AUD/USD is trading.7315, down 0.0056 or -0.77% and the NZD/USD is at.6598, down 0.0009 or -0.13%.

The RBA also highlighted risks to global growth from rising trade protectionism, noting uncertainties around tit-for-tat tariff measures could "materially weaken the investment outlook and may weigh on confidence and financial market conditions more generally".

The June quarter inflation outcomes were in line with the forecasts in the May Statement.

AUD fell from 0.7450 to 0.7381, a result of Dollars strength while the Reserve Bank (RBA) appears to be progressively buoyant that the Australian economy is evolving as desired in the RBA's quarterly Statement on Monetary Policy (SoMP).

Inflation will remain stuck at the low end of the Reserve Bank's target range until at least the end of 2020, and even dip below 2 per cent in the current quarter, the central bank said, confirming interest rates will not rise anytime soon.

The RBA now sees underlying inflation slowing to 1.75 percent by the end of this year, down from a previous forecast of 2 percent.

Inflation has consistently undershot the RBA's target since early 2015 and was the single biggest reason the central bank cut interest rates to record lows in August 2016.

Beyond that time frame, the central bank kept its inflation forecasts relatively unchanged.

That's still the case, and the bank now expects the same growth rate to be maintained all the way through to December that year. Previously, it expected both core and underlying inflation to reach 2.25% by the middle of 2020.

The bank also expects the unemployment rate to hover around current levels of 5.5 per cent this year, before easing to 5.25 per cent by mid-2019. The RBA maintained that the unemployment rate will stay around 5.25% through June 2020, before dropping to 5% in December.

The Reserve Bank of Australia (RBA) expects growth in the A$1.8 trillion economy to accelerate to 3.25 percent in 2018 and 2019 before easing slightly to 3 percent in 2020.

However income growth remains below its 20-year average of about six per cent and the resulting flatline in consumer spending growth - a key economic driver - remains a source of uncertainty for the economy, the bank said.

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