The Reserve Bank of Australia left its cash rate unchanged at a low of 0.1% at its May meeting Tuesday.

The decision was expected. Bank members "reaffirmed their commitment to maintaining highly supportive monetary conditions until at least 2024 when actual inflation is within the 2% to 3% target," the RBA said in a statement after its meeting.

The bank's board also remained committed to a three-year government bond yield target of 10 basis points, the statement said.

In July it will consider retaining an April 2024 bond as the target bond or to shift to the next maturity. "Meantime, a pick up in inflation and wage growth is expected but it is likely to be only gradual," the bank said.

Consumer prices are projected to rise temporarily to more than 3% in the second quarter "on a reversal of some COVID-19-related price reductions."

"Regarding gross domestic product, the RBA's scenario has been revised up further - with the growth of 4.75% expected in 2021 and 3.5% in 2022 as business investment picked up and household spending strengthened," the bank's statement said.

The bank "upgraded its forecasts for gross domestic product growth and inflation but reiterated that it is prepared to extend its asset purchases. We stick to our forecast of another $100 billion extension in the bank's bond purchase program, though this would happen in July rather than in June," Capital Economics' Marcel Thieliant said Tuesday.

RBA Gov. Philip Lowe said while Australia's economic recovery had been stronger than expected the bank was not yet considering lifting the cash rate ahead of its three-year target outlined late last year.

"The global economy is continuing to recover from the pandemic and the outlook is for strong growth this year and next," Lowe said. "The recovery remains uneven, though, and some countries are yet to contain the virus."

He said thanks to positive sentiment around vaccines and fiscal stimulus in the U.S., sovereign bond yields had been steady over the past few weeks and inflation expectations have lifted to be closer to central banks' targets.

Meanwhile, Australia's trade surplus narrowed to A$5.57 billion ($4.30 billion) in March 2021 from A$7.60 billion in the previous month and missed a market consensus of a surplus of A$8 billion.

This was the smallest trade surplus since November last year as exports fell by 2% to A$38.27 billion while imports jumped 4% to a 13-month high of A$32.7 billion.

"Considering the first three months of the year, the trade surplus widened to A$22.7 billion from A$17.55 billion in the same period of 2020," the Australian Bureau of Statistics said Tuesday.

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