Rising interest rates have taken the edge off credit demand, including housing loans - the mainstay of borrowing in the past year.
The Reserve Bank is due to hold its monthly board meeting today, but economists expect the central bank to keep the cash rate at 4.5 per cent.
The central bank has raised the rate six times since last October.
Reserve Bank data showed total credit rose just 0.2 per cent in April for an annual rate of 2.1 per cent, less than half the rate of a year ago.
While economists expect the central bank will pause to gauge the impact of its previous rate increases on the economy, ongoing volatility in financial markets is another reason to stay its hand for now.
Money markets are even pricing in the risk of a rate cut in coming months, although new inflation data would suggest otherwise.
The TD Securities-Melbourne Institute monthly inflation gauge rose 0.5 per cent last month, partly reflecting the 25 per cent increase in tobacco tax.
Annual inflation rose 3.7 per cent in the year to May, its highest rate since October 2008.
TD Securities senior strategist Annette Beacher said the markets are "clearly overshooting" by pricing in a material risk of a rate cut.
Rising interest rates since October have added more than A$300 ($372) a month to the average A$300,000 mortgage.
The Reserve Bank's credit data showed housing credit rose by just 0.5 per cent in April, which saw the annual rate step down to 8.4 per cent from 8.5 per cent previously.
Business credit demand turned negative again, falling 0.4 per cent in April, having recorded the first rise in 14 months in March.
Annual business credit was down 7.0 per cent.
Corporate Australia raked in its biggest profits in a year - A$57.2 billion - during the first three months of this year, new data showed.
The gross operating profits of companies rose by a seasonally adjusted 3.9 per cent in the March quarter, the fastest pace in 18 months.
The balance of payments for the March quarter also showed the current account deficit narrowed to A$16.55 billion after a revised A$18.47 billion shortfall in the December quarter, much in line with economists' forecasts.
- AAP
Australia expected to hold cash rate
AdvertisementAdvertise with NZME.