The Reserve Bank has finally slammed the brakes on rate rises — but don't pop the champagne just yet.

On Tuesday, the RBA left the cash rate at 4.35%, the first hold this year after three consecutive hikes. Those earlier increases have already added nearly $300 a month to repayments on an average $600,000 mortgage.

The decision was widely expected, but the bank's accompanying statement carried a clear warning: it'll "do what it considers necessary" to tame inflation, including raising rates further if required.

Inflation's still running hot. The consumer price index rose 4.2% in the year to April — down from 4.6% in March, but still well above the RBA's 2-3% target band. The bank's preferred measure, trimmed mean inflation, climbed 3.4% over the same period.

The RBA board noted that oil prices have eased in recent weeks and house prices are falling in some capital cities, but said both headline and underlying inflation remain "too high."

"Energy and most related commodity prices remain higher than they were prior to the conflict in the Middle East," the board said. Higher fuel prices have added directly to inflation, and price pressures are "likely to remain high for some time."

Meanwhile, the labour market's showing cracks. Unemployment jumped from 4.3% in March to 4.5% in April — the highest rate since November 2021. The board acknowledged the jump but said other measures of labour market conditions have been more resilient.

The bank's also watching global oil supply issues closely. With the conflict in the Middle East unresolved, energy prices are expected to stay elevated, keeping upward pressure on inflation.

Treasurer Jim Chalmers called the hold a "welcome reprieve" for mortgage holders, but added: "It doesn't make life any easier for people, but it doesn't make life harder either."

"The end of this war [and the opening of the Strait of Hormuz] can't come soon enough," Chalmers said.

Economists are split on what comes next. KPMG chief economist Dr Brendan Rynne said the pause is likely short-lived.

"We can expect at least another hike this year, most likely in August, in order to bring core inflation back down to the mid-point of the RBA's target band," Rynne said.

Deloitte Access Economics partner Stephen Smith agreed: "The next move is more likely to be up than down, making today's decision a pause rather than a pivot."

Markets are pricing a 64% chance of a rate rise by next February, and near certainty of a cut by November 2027. So the reprieve might not last long.

RBA governor Michele Bullock is due to face the press at 3.30pm AEST. All eyes will be on whether she signals a hike in August or hints that the tightening cycle is truly over.

For now, mortgage holders can breathe — but only just.