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Reserve Bank of Australia board members agreed to leave interest rates unchanged but held onto an easing bias and look likely to cut rates further if the economy stumbles in the second half of 2009.

As expected, the central bank said it will keep its cash rate target steady for at least another month at a 49-year low of 3.00%. "The board's current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed," Governor Glenn Stevens said in a statement.

Australia's inflation rose in June from a month earlier, lifted by higher prices for fruit, vegetables, motoring and insurance services, but reached a record low on an annual basis, according to a closely watched inflation indicator.

Policy makers will likely not be too unsettled by June's price fillip, as they already expect price pressures to broadly continue a downward trend in coming months as economic growth remains muted.

Australia's labour market showed ongoing signs of distress in June as employers continued sharply scaling back job advertising, but the slowdown is yet to translate into concerted job shedding. Employers instead appear to be finding ways to retain staff, hopeful that an upturn in the economy, which has so far avoided technical recession, isn't far off.

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Australian retail sales ran hot in May as government fiscal stimulus and interest rate cuts to offset the global financial crisis continued to wash through store checkouts. But building approvals hit a wall in May, a likely reflection of rising concern about unemployment over the medium term, economists said.

Retail sales rose 1.0% in May from April to a seasonally adjusted $19.55bn, the Australian Bureau of Statistics said. It added to a 2.2% rise in March and a 0.3% rise in April.

The Australian sharemarket had its fourth consecutive month of gains in June. 

The All Ordinaries Index closed the month 3.5% higher at 3,947.8 points.  In June, investors returned to the sharemarket on growing belief that the global economy is slowly rebounding. 

Global shares continued their upward trend in June, consistent with the Australian sharemarket.

30 June represented the close of the Australian financial year.  The past year will be remembered for the Global Financial Crisis and near collapse of the global financial system. 

Australian consumer sentiment surged in June on the back of news the economy is holding up better than expected, while housing finance commitments rose for a seventh consecutive month in April, buoyed by historically low interest rates and government support for new home buyers.

The upward trend continued for the Australian sharemarket during May. 

The All Ordinaries Index closed the month 1.8% higher at 3,813.3 points.  The market was up more than 4.5%, before retracing during the second half of the month. 

Global shares continued with its recent rally. The Dow Jones Industrial Average recorded it biggest three-month gain since November 1998.

 The Federal Government delivered one of the most eagerly anticipated Budgets last night. 

Given the magnitude of the Budget deficit, the Government did an exceptional job of managing the media and warning the public about the bad news in the weeks leading up to Budget night.

As is always the case with the Budget, everything is just a proposal until legislated.

From our perspective the key issues coming from the Budget include:

Australia's unemployment rate fell sharply and unexpectedly in April signalling concerted economic policy stimulus over recent months may have garnered early and unusually strong traction.

The Australian economy created 27,300 jobs in April, with 49,100 full-time jobs churned out through the month, the Australian Bureau of Statistics said.

It was the biggest one-month rise in employment since October 2008. Unemployment fell to 5.4% in April from 5.7% in March. Economists had expected a rise to a fresh 6-year high of 5.9% and that employment fell 25,000.