Were the RBA dissenters right to argue for a July cut?

Although inflation had eased faster than expected, the board was still concerned that Australia's relatively tight labour market could push wage costs and prices higher.

A majority of six board members judged it was more prudent to leave rates on hold and wait for additional data - including jobless figures - ahead of the August meeting, to confirm inflation was sustainably returning to target before moving lower again.

"Lowering the cash rate a third time within the space of four meetings would be unlikely to be consistent with the strategy of easing monetary policy in a cautious and gradual manner," the board found.

The unemployment rate was 4.1 per cent in May, barely changed from a year earlier, while other indicators such as high job vacancies pointed to little movement in the near term, the board noted.

"The staff still assessed that labour market conditions were tight, though with a considerable degree of uncertainty," the minutes said.

"Growth in unit labour costs - a comprehensive, though volatile, measure of labour costs - remained high, mostly because of persistently weak productivity growth."

But the board's judgment that the labour market remained tight was challenged last Thursday when the Australian Bureau of Statistics revealed the unemployment rate jumped to 4.3 per cent in June, taking the market and seemingly the RBA by surprise.

The data bolstered the case of a dissenting rump of three board members, who argued that a rate cut was warranted because of greater downside risks to the economy "from a likely slowing in growth abroad and from the subdued pace of GDP growth in Australia".

"That in turn posed a risk that underlying inflation would moderate somewhat more rapidly than envisaged in the May projections," the minutes said.

Board members also noted data was increasingly showing workers were changing jobs less often, suggesting it was becoming easier for employers to attract and retain staff, and that wage growth was continuing to moderate.

"Members noted that these factors might imply that supply and demand in the labour market were closer to balance."

Interest rate markets have almost fully priced in a 25 basis point cut to the official cash rate at the August meeting, and project it will fall to 3.2 per cent by the end of the year.

Each 25 basis point cut to the cash rate would shave about $90 off monthly repayments on a $600,000 mortgage.

Another factor behind the board's decision not to cut in July was the bank's assessment that the threats to the Australian economy from Donald Trump's tariffs had eased somewhat since the previous meeting in May.

Recent international developments had had "little discernible effect" on the Australian economy, although available indicators for the June quarter suggested that growth in household consumption had been slightly below the bank's expectations.

In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.

The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.

While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.

"Australia's infrastructure boom isn't over," he said.

"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."