The central bank has trimmed its growth forecasts, but Treasurer Wayne Swan says Australia is still at the "front of the pack" with a strong economy and budget position.
The Reserve Bank (RBA), in its quarterly statement on monetary policy on Friday, kept its underlying inflation forecasts comfortably within its two to three per cent target range, suggesting there is scope to cut the cash rate further if needed.
As in Tuesday's board meeting statement, when it left the cash rate unchanged while most economists had expected a cut, the RBA said "the stance of monetary policy remained appropriate, for the time being".
National Australia Bank senior economist David de Garis said the RBA clearly retained a bias to lower rates.
But having cut the cash rate in October and then left it unchanged this week, "for them to do an about-face and ease in December, without some new game-changing information, would be unusual to say the least", Mr de Garis said.
The RBA said the outlook for the economy was a "little weaker" than predicted three months ago, and its revisions were largely as a result of it now forecasting an earlier, and lower, peak in mining investment.
Over the year to June 2013, the economy is expected to grow at 2.75 per cent, the bottom end of a previous 2.5-3.5 per cent forecast range made in August.
In year-average terms, as used by federal treasury, growth is forecast at three per cent for 2012/13, matching the government's forecast in the mid-year budget review released last month.
However, the central bank warned that risks to the global outlook remain tilted to the downside amid the ongoing European debt crisis and the impending US fiscal cliff - when automatic spending cuts and tax increases come into play.
"The ongoing tough times abroad reinforce that there isn't a country in the world you'd rather be in than Australia," Mr Swan said in a statement.
In finetuning its forecasts, the RBA said fiscal consolidation in Australia at state and federal levels would subtract from growth over 2012/13.
The federal government has forecast a $1.1 billion surplus this financial year, a sharp turnaround from the $43.7 billion deficit in 2011/12.
Prime Minister Julia Gillard insists the surplus will be delivered, despite the worrying signs coming out of the US and Europe.
"Of course we are concerned about the fiscal cliff in the US ... if this matter isn't resolved, it will have severe implications for the economy of the United States, and that's got implications for the global economy, including our own," Ms Gillard told reporters in Bali.
"But I'm not going to deal with hypotheticals about our budget position."
However, new modelling by independent forecaster Macroeconomics suggests the budget will remain in deficit for the remainder of the decade with a greater reliance on debt to fund a range of programs, such as education, disability and dental care.
Assistant Treasurer David Bradbury said this was "completely out of whack" with some premier forecasting institutions around the world.
But shadow finance minister Andrew Robb said Macroeconomics had "belled the cat" on the budget's poor structural health.