The Reserve Bank of Australia is waiting to see how recent interest rate cuts flow through the economy before deciding if it needs to cut the cash rate further in 2013.
In the minutes from its February 5 board meeting, released on Tuesday, the RBA said there were signs the 1.75 percentage points in interest rate cuts delivered between November 2011 and December 2012 were starting to provide a boost to underperforming sectors like housing.
The RBA kept the cash rate on hold at three per cent in February, its equal-lowest level since the global financial crisis.
"Interest rate sensitive parts of the economy had shown some signs of responding to these lower interest rates, which were well below their longer-run averages, and further effects could be expected over time," the RBA said.
"Noting that monetary policy was already accommodative as a result of the substantial easing of policy over the past 15 months, and that this stimulus was continuing to work its way through the economy, the board judged that it was prudent to leave the cash rate unchanged at this meeting."
But it noted the Australian dollar remained "persistently high" and was having a negative impact on some sectors.
The high value of the Australian dollar, along with an expected peak in mining investment during 2013, had earlier prompted the central bank to revise its forecasts for economic growth down to 2.5 per cent for the current calendar year, below its long-term trend.
The RBA said that, with inflation expected to remain within near the middle of its target range of two to three per cent, it had room to cut the cash rate further if needed.
"The inflation outlook, as assessed at this meeting, would afford scope to ease policy further, shout that be necessary to support demand," it said.
The RBA noted that global economic conditions had improved since the start of 2013, with the US avoiding a so-called fiscal cliff of tax hikes and spending cuts, improved economic data from China and the Japanese government announcing policies to grow the world's third-largest economy.
The RBA said iron ore prices had improved significantly during December due to increased demand from China but said the current high levels were unlikely to be sustained.