"The RBA's decision to hold the cash rate at 3.85% in July reflects the significant uncertainty facing the Australian and global economies," said Innes Willox, Chief Executive of the national employer association Australian Industry Group.
"While significant progress has been made in restoring price stability, the RBA has understandably decided to keep its powder dry as economic conditions evolve.
"Global economic factors are highly uncertain, particularly as the world waits for a landing point to emerge regarding US tariffs. Meanwhile, the relative weakness in Australia's economic performance this year poses a real risk the recovery is slower than expected.
"Meanwhile, the domestic labour market remains very tight and businesses in some parts of the economy continue to have difficulty passing on persistent cost increases. Productivity growth sadly remains poor. These factors all point to ongoing pressures on the private sector, which has been unhelpfully weak for over a year.
"In the face of such uncertainty, the RBA's caution in waiting to see clearer directions in the economic data is understandable. However, it equally points to the greatly heightened uncertainty in our economic outlook, which is a major inhibitor to the private sector investment needed to drive Australia's recovery.
"Today's decision and accompanying statement sets the stage for the Treasurer's economic reform roundtable that is focused on arresting our lacklustre productivity.
"I look forward to being part of the discussion," Mr Willox said.
