The Reserve Bank of Australia has signalled that it could cut interest rates to new record lows if the jobless rate does not fall below its current 5 per cent, after it kept its 1.5 per cent cash rate on hold and trimmed its economic growth forecast.

Resisting financial market pressure for a pre-election interest rate cut, Reserve Bank governor Philip Lowe said the bank ‘‘recognised that there was still spare capacity in the economy’’ and downgraded its economic growth forecast to about 2.75 per cent in 2019, from 3 per cent.