The Reserve Bank has kept the cash rate on hold in a widely expected move, following signs of a recovery in the non-mining sectors of the economy.
The RBA left interest rates at a record low of 2.5 per cent for the third consecutive month, after last cutting rates in August.
The Australian dollar, while below its level earlier in the year, is still uncomfortably high.
"At today's meeting, the Board judged that the setting of monetary policy remained appropriate," RBA Governor Glenn Stevens said.
"The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target."
The Australian dollar slipped a quarter of a cent against its US counterpart after the statement was released, falling to 94.68 US cents from 95 US cents.
The central bank reiterated its desire for a lower exchange rate, said that while the Australian dollar was below its levels earlier this year, it was "still uncomfortably high".
Pedestrians and a cyclist go past the Reserve Bank of Australia (RBA) headquarters in the central business district of Sydney, Australia. Photo: Dan Himbrechts
"A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy," Mr Stevens said.
The RBA has increased its jawboning about the strength of the Australian dollar in recent weeks. The currency has risen from a year's low of just below 90 US cents in late August, after shedding more than 15 per cent of its value from mid-April.
Last week, Mr Stevens said the dollar was not supported by the costs and productivity in the economy, adding that the terms of trade are also more likely to fall than rise.
"The RBA is worried about the high exchange rate," Moody's Analytics associate economist Katrina Ell said.
"Mining investment is no longer the boost that it once was so a lower exchange rate is needed to lift the other export-facing sectors."
Mr Stevens was more positive about the economy, saying that in the medium-term, "private demand outside the mining sector is expected to increase at a faster pace", although the outlook was still uncertain.
UBS interest rate strategist Matthew Johnson said the RBA appeared more confident that low interest rates were working to boost the economy.
"I think they've upgraded their assessment of the domestic economy. They're more sure that low interest rates are boosting the economy but they are also a little bit annoyed that the currency is still so high," Johnson said.
What's next for the RBA?
While the central bank's statement offered little in the way of forward guidance, Mr Johnson said he expected further detail in the Statement of Monetary Policy (SOMP) when it is released on Friday.
Citi's chief economist Paul Brennan said the SOMP and the minutes of the meeting would shed some light on whether the RBA was prepared to close off the option of another cut.
"They've wanted to keep this option open in the last couple of months. ... On balance, they probably will just want to keep that option open just because they still remained quite concerned about the exchange rate."
The bank had been widely expected to keep the cash rate at its record low on Melbourne Cup Day, the first time since 2005 that its November board meeting was not considered "live".
The Reserve Bank has increased or lowered the cash rate 10 times in November since it started publicly announcing its monetary policy settings in 1990. A "live" meeting is when expectations for a rate cut or rise are mixed.
The bank has been reducing the cash rate since November 2011 in an effort to stimulate the economy as mining investment peaks.
But expectations for the first interest rate cut since August had been low, and fell further after figures released yesterday pointed to stronger-than-expected retail spending in September and a continued rise in house prices.
Retail sales figures released yesterday also struck an optimistic note. Spending rose 0.8 per cent in September, above economists’ expectations of a 0.4 per cent increase.
In the year to October, average house prices across the country rose 7.6 per cent. Prices in Sydney were up 11.4 per cent, Melbourne 6.8 per cent and Brisbane 4.1 per cent.
Analysts are set to turn their attention to the release of the October jobless numbers on Thursday. Economists forecast unemployment rate to tick up to 5.7 per cent in October, from 5.6 per cent in September, and for the economy to add 10,000 jobs. The jobless rate was 5.8 per cent in August.
ANZ's monthly jobs advertisements survey, which was released yesterday and is seen as a forward indicator, recorded a slight fall in October, pointing to a possible stabilisation in the employment market in trend terms.