The minutes of the Australian central bank's most recent meeting suggest policymakers believe they have time to see how the economy reacts to tightening that has already occurred, making another rate hike in June less probable, ANZ said in a Tuesday report.

ANZ continues to expect the Reserve Bank of Australia (RBA) to maintain the cash rate at 4.35% for a "prolonged period."

The central bank's board is not providing forward guidance as it is uncertain on the extent of tighter financial conditions, and is in more of a "wait and see" mode with respect to both domestic activity developments and the Middle East conflict, ANZ said.

In its discussions on activity, the board largely waved off declines in business and consumer sentiment, suggesting that a bias toward another rate increase could still prevail, especially when combined with comments from Assistant Governor (Economic) Sarah Hunter who said the risk of inflation pass through is faster and wider now than in the past.

However, ANZ is more pessimistic on activity than the board.

"We expect that the decrease in disposable incomes from higher inflation will likely be sufficiently large that activity disappoints relative to the RBA's estimates," ANZ said.