SYDNEY (Reuters) – Australia's central bank held its key cash rate at 4.5 percent as expected yesterday, saying past hikes and turmoil in global markets meant rates were at the right level.

The steady outcome from the Reserve Bank of Australia's (RBA) monthly policy meeting was widely anticipated given it had already lifted rates six times in eight months, putting it far ahead of any other central bank in withdrawing stimulus.

The RBA's statement led with the latest upheavals in markets and fears of contagion from the euro zone debt crisis, though it sounded less alarmed than some analysts had expected.

Indeed, RBA Governor Glenn Stevens remained cautiously upbeat on the outlook for the Asian and domestic economies, saying high export prices were still set to boost incomes at home. "Taking all the available information into account, the Board views this setting of monetary policy as appropriate for the near term," wrote Stevens. were little changed.

Investors have recently priced out any chance of a further rate rise this year, and only a 50-50 chance of a hike for a full 12 months to come."I think the market has got a bit carried away about what's happening in Europe," said Michael Blythe, chief economist at Commonwealth Bank. "As the RBA rightly points out, Australia's economy is still nicely poised."

"We are forecasting rates at 5.0 percent by December."

Figures due out today are expected to show the economy grew around 0.6 percent in the first quarter, compared to the previous quarter, and by about 2.6 percent for the year. Higher rates are starting to be felt in the housing market where home prices have cooled in the past month after a blistering run last year. Figures out yesterday suggested that home construction was also starting to suffer, threatening hopes for a building boom this year. Approvals to build new dwelling units sank 14.8 percent in April, with those for houses down by the most in two decades.

Yet the RBA still expects economic growth to accelerate to around the long-term trend of 3.25 to 3.5 percent over this year, driven in large part by huge increases in the price of Australia's key exports – coal and iron ore.

"In Australia, with the high level of the terms of trade expected to add to incomes and demand, output growth over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing," wrote Stevens.