Economists are tipping the Reserve Bank to cut the official cash rate by 25 basis points to 3.85 per cent, when its two-day meeting wraps up on Tuesday.
Should the central bank cut rates, it would be only the second time in almost five years that interest levels on mortgages have been reduced.
Finance Minister Katy Gallagher noted homeowners would be watching the bank's decision closely, adding that a fall in inflation levels was a positive sign.
"The market is predicting a rate cut, we know inflation has come back into band, both in all measures, and that is a welcome progress that has been made over the last two years, and we know that has been hard for households," she told ABC TV on Tuesday.
"The Reserve Bank will look at all the data, they will look at all the employment data, they will look at what is happening on the inflation front and they will make their decision."
Inflation for the March quarter remained steady at 2.4 per cent, while underlying inflation, which removes volatile price movements, dropped to 2.9 per cent.
Both measures are within the target band of between two and three per cent, set by the Reserve Bank.
Senator Gallagher while inflation was within the target range, the impact of upward movements in prices was still being felt.
"Some of those really high peaks in inflation really hit household budgets, and people felt it when they went to the supermarket, when they paid their bills," she said.
"We get the job isn't done either and that we've got to continue our focus, not only on inflation but also on productivity on that side of the economy over the next couple of years."
Nicola Powell, chief economist at property portal Domain, said an interest rate cut was pretty much a given.
Meanwhile, US President Donald Trump's tariffs policy has bolstered the case for a cut to support the Australian economy, amid an anticipated global slowdown.
"Obviously, it's going to be at the forefront of their mind, the impact that that is going to have on the domestic economy," Dr Powell told AAP.
"When you look at trimmed mean inflation, it's now within their (target) band (of two to three per cent). And we know that the RBA likes to really be guided by that trimmed mean inflation."
Most economists agree the central bank will cut rates by 25 basis points.
That would result in the median mortgage holder with a $600,000 debt having to pay about $90 less per month in interest repayments, assuming the banks pass it on in full.
Dr Powell said she would be surprised if they didn't, given that competition among the banks for customers and new loans was high.
If the RBA did slash rates by 100 basis points - or 75 as the market is predicting - by year's end, house prices are likely to surge.
Increased borrowing capacity for home buyers will cause demand to rise, and with the provision of new supply still hampered by high construction costs and planning bottlenecks, prices will follow, Dr Powell said.
Even before the cut is passed through to buyers, higher confidence already shows up in stronger demand.
"In the lead-up to the first rate cut that occurred in February, we were already starting to see an improvement in sentiment coming from inquiry data," Dr Powell said.
And that is likely to flow through quicker in the more expensive capital city markets like Sydney and Melbourne, which are more sensitive to changes in interest rates, she said.
