Borrowers hoping for more interest rate relief would have been disappointed at the Reserve Bank's hawkish tone following its first cut in more than four years.
While Tuesday's 25 basis point cut will be cheered by millions of homeowners across the country, the $100 per month reduction on repayments for an average mortgage will be a drop in the bucket for many Australians.
They have seen tens of thousands of dollars added to the cost of their home loans over the past three years.
RBA governor Michele Bullock said the positive progress Australia had made on inflation in recent months had warranted the cut, but there were still arguments against it.
The labour market was tighter than had been expected, leading the central bank to lift its forecast for underlying inflation until mid-2027.
As a result, market expectations of a further three cuts this easing cycle were "unrealistic", Ms Bullock said.
"The board needs more data and evidence that inflation is continuing to decline before making decisions about the future path of interest rates," she told reporters after the meeting.
"The board is very alert to upside risks that could derail the deflationary process."
Whether quarterly consumer price index data continues to show inflation falling sustainably will have the greatest influence on the bank's decision-making.
Ms Bullock said a softer-than-expected result in the December quarter figures gave the board confidence it was heading in the right direction.
But inflation data for the March quarter is not due out until April 30, all but ensuring the RBA sits on its hands at its next rates meeting on April 1.
Other than inflation data, the Reserve Bank will closely scrutinise the labour market to make sure ongoing tightness doesn't contribute to price growth rebounding again.
If the wage price index, released by the Australian Bureau of Statistics on Wednesday, continues to show wages easing, it could help convince RBA economists that low unemployment is not as much of a threat to inflation as previously thought.
But Treasurer Jim Chalmers said on Wednesday he expected the data would show that "real wages are growing again in our economy".
"Real wages are up, unemployment is low and now interest rates have started to come down as well - all four of those things are very good things," he told Nine's Today Show.
In the bank's Statement on Monetary Policy, released alongside the rate cut on Tuesday, the bank acknowledged there is a risk it has misjudged how much excess demand there is in the labour market.
"There's a lot of debate out there in the market about what level of unemployment or employment is consistent with low and stable inflation," Ms Bullock said.
"I'm certainly not committing any number on what that unemployment rate is, but we are continuing to test how low we can keep unemployment without adding to inflationary pressures, and so far, in good news, we're achieving it. But there are risks."
