Low interest rates are likely to continue for a while yet as the Reserve Bank waits to see how Australia’s current economic challenges play out.

In the minutes of its August 5 board meeting, the RBA said it was appropriate to keep the cash rate on hold at 2.5 per cent – where it has been for a year now, given uncertainty about Australia’s economic outlook.

“Members noted that there was inevitably a significant degree of uncertainty about the outlook, given the number of forces working in different directions,” the RBA said in the minutes, released on Tuesday.

“The board judged that monetary policy was appropriately configured and that, on present indications, the most prudent course was likely to be a period of stability in interest rates.”

The central bank is waiting to see how the economy shifts away from its dependence on mining investment, which is declining after being a key driver for around a decade.

Economic growth was above average in the March quarter, driven by strong growth in mining exports and a pick-up in non-mining activity, the RBA said.

It said current indicators suggested that mining exports were little changed in the June quarter while mining investment had continued to fall.

But non-mining investment doesn’t appear ready to pick up the slack.

“Indicators of investment intentions in the non-mining sector were showing signs of improvement since the latter part of 2013, although liaison suggested that businesses were reluctant to commit to major new investment projects until they perceived a sustained pick-up in demand,” the RBA said.

“Overall, GDP growth was likely to have slowed to a more moderate pace in the June quarter and was expected to be below trend over 2014/15, before picking up thereafter.”

Low interest rates were continuing to support demand in the economy, the RBA said.

The Australian dollar, however, remained high by historical standards and “hence was offering less assistance than it might in achieving balanced growth in the economy”.

The RBA said dwelling investment was likely to remain strong in the period ahead while established house price growth remained robust.

It said it was likely to be some time before unemployment declined consistently, suggesting subdued wage growth which would keep inflation within the RBA’s two-to-three per cent target band.