Embattled borrowers have been given a pre-Christmas reprieve after Reserve Bank of Australia held its official cash rate steady at 4.35 per cent on Tuesday. In a widely anticipated decision, the Reserve Bank board decided at its last meeting for the year to leave its interest rate unchanged, effectively giving borrowers a two-month holiday from the threat of higher repayments. The RBA board made its call following data showing inflation growth slowed to 4.9 per cent in October and increasing signs of the economy slowing. Household spending has fallen significantly as millions of families have cut back heavily on discretionary purchases and there are signs that the labour market, which has proved resilient for most of the year, may be starting to weaken. Treasurer Jim Chalmers said the decision was "welcome news". "The last thing that people needed at Christmas time was for another rate rise and so I think this decision...from the Reserve Bank will be met with sighs of relief right around Australia," Dr Chalmers said. But the treasurer again talked down the prospect of any further cost of living relief when the mid-year budget update is released next week, instead flagging the possibility of extra support would be consider when framing the May 2024 budget. Though interest rates will remain on hold until at least early February, there is no indication yet that they have peaked. Reserve Bank governor Michele Bullock warned that, "whether further tightening of monetary policy is required...will depend upon the data and the evolving assessment of risks". Ms Bullock said while there had been "encouraging signs" on goods inflation, services price pressures had been persistent overseas "and the same could occur in Australia". But the central bank appears more relaxed about the risk of rising wages fuelling inflation. Pay gains accelerated to an annual rate of 4 per cent in the September quarter, underpinned by a national increase in the minimum wage. Bt Ms Bullock said the increase had been anticipated and "wages growth is not expected to increase much further". The governor nonetheless expressed concern about a range of other uncertainties in the outlook. These include doubts around the strength of household spending, lags in the effect of monetary policy and business pricing decisions. Abroad, she said, the view was clouded by doubts around the Chinese economy and the impact of conflicts such as those in Ukraine and the Middle East. "High interest rates are working," and holding the cash rate steady would allow time to assess their ongoing effect, Ms Bullock said. But she reiterated the central bank's determination to bring inflation back within the 2 to 3 per cent target band "within a reasonable timeframe". Ms Bullock's remarks indicate the central bank remains prepared to tighten monetary policy further in the new year if underlying price pressures, particularly in the cost of services, do not ease more significantly. The next Reserve Bank board meeting is scheduled for February 5 and 6, when the central bank shifts to a new calendar of eight meetings per year, as recommended by the RBA review. Several economists think interest rates are likely to have peaked. KPMG chief economist Brendan Rynne said "price momentum is heading in the right direction", meaning the central bank "may not need to raise rates further". HSBC chief economist Paul Bloxham similarly expects that "the RBA is done with its hiking phase", though he added that there was a "non-zero risk" of a rise in February if December quarter inflation figures due out late January are unexpectedly strong. But Mr Bloxham warned against expecting interest rates to come down soon. The gradual slowdown in inflation that is anticipated will mean that "the RBA may be one of the last central banks to be able to cut", he said, predicting any reduction will be delayed until early 2025. Others think rate relief will come sooner. The Organisation for Economic Cooperation and Development has forecast a 0.75 percentage point reduction from the September quarter next year.