Canberra, Feb 2 (TIWN) Soaring inflation and an improving job market has not persuaded the Reserve Bank of Australia (RBA) to lift its interest rate from a record low figure.

The RBA slashed interest rates and launched a A$350 billion ($246 billion) bond buying program in 2020 in an effort to prop up the financial sector during the pandemic.

Back then, RBA Governor Philip Lowe had forecast the low rate would continue until 2024 but by last year the changing economic conditions led some economists to suggest an interest hike could be on the cards in 2022.

In Tuesday's announcement, the RBA noted that although the Omicron variant of Covid-19 had made a financial impact, it had not "derailed the economic recovery" with the board forecasting the gross domestic product (GDP) to increase by 4.25 per cent in 2022 and 2 per cent over 2023.

The RBA reported that the national job market had recovered strongly, with unemployment falling to 4.2 per cent in December.

The board conceded that inflation had "picked up more quickly than the RBA had expected but remains lower than in many countries".

Australia's consumer price index (CPI) inflation rate is 3.5 per cent and is being affected by higher petrol prices, higher prices for newly constructed homes and the disruptions to global supply chains.

In underlying terms, inflation is 2.6 per cent, said the RBA.