Bond markets have started to dial back expectations that the Reserve Bank of Australia will lower the cash rate as soon as May after the central bank disappointed pundits by acknowledging it had not even considered lowering borrowing costs at its April meeting.

The Reserve Bank left the cash rate on hold at 4.1 per cent, as widely expected by the market, saying it was still “cautious about the outlook”. The decision comes as the Labor government faces a general election on May 3 amid high costs of living and housing.