The decision to hold was widely expected and the Australian dollar held steady at around US72.60¢ before climbing to around US72.75¢.

In the accompanying statement, the RBA said the low inflation outlook "left scope for further easing of policy, should that be appropriate to lend support to demand".

"In Australia, the available information suggests that moderate expansion in the economy continues in the face of a large decline in capital spending in the mining sector," governor Glenn Stevens said.

"While GDP growth has been somewhat below longer-term averages for some time, business surveys suggest a gradual improvement in conditions in non-mining sectors over the past year.

"This has been accompanied by stronger growth in employment and a steady rate of unemployment," he said.

Tuesday's decision means the RBA will wind up 2015 with just two cuts to the cash rate on the calendar, in February and then in May.

Most central bank-watchers expect it to remain on hold throughout 2016, although subdued inflation and cooling house prices in Sydney and Melbourne leave it free to cut again if necessary.

Citi's chief economist for Australia Paul Brennan is tipping a first-quarter 2016 cut to the cash rate, to 1.75 per cent. Governor Stevens recently told economists and the media to "chill out" on interest rates until after the summer break, when the board would take a fresh look at the data.

"I think [Mr Stevens} will find that inflation is still very low, and possibly a fair bit lower than what they're thinking, towards the bottom of the [target 2 to 3 per cent] band," he said.

"And the global backdrop is still going to be of growth below trend, while commodity prices, including those of iron ore and coal, will probably be lower still.

"And they'll probably also be waiting for capital expenditure to kick in as well," he said.