In a statement issued on Tuesday, Reserve Bank Governor Glenn Stevens said the board at its meeting had decided to leave the cash rate unchanged at 2.25 per cent.

The statement said commodity prices had declined over the past year, in some cases sharply.

"The price of oil in particular has fallen significantly. These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply, " the statement said.

"The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates."

The statement continued: "In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak.

"As a result, the unemployment rate has gradually moved higher over the past year. The economy is likely to be operating with a degree of spare capacity for some time yet.

"With growth in labour costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate."

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