* RBA holds rates at 1.5 pct as widely expected
* Stays upbeat on economy on commodities prices, global growth
* Market implies a 6 pct chance of another cut later in year (Updates with comments from RBA, context, market reaction)
By Swati Pandey
SYDNEY, March 7 (Reuters) - Australia's central bank held rates steady on Tuesday, a widely expected decision given policymakers recently signalled a steady outlook for much of the year ahead.
The central bank kept rates at a record low of 1.5 percent for an eighth straight month, following easings in August and May last year. All 67 economists in a Reuters poll expected a steady outcome this week.
Governor Philip Lowe remained optimistic about the economy as commodity prices jumped and global growth rebounded. Australia's A$1.7 trillion ($1.3 trillion) economy expanded 2.4 percent in 2016 as the country transitions away from a once-in-a-generation mining investment boom. have risen strongly and non-mining business investment has risen over the past year," Lowe said.
"Most measures of business and consumer confidence are at, or above, average. Consumption growth was stronger towards the end of the year."
He also reiterated the central bank's forecasts for a gradual pick-up in underlying inflation, which is pinned at a record low of 1.5 percent. Headline inflation was expected to pick up over the course of 2017 to be above 2 percent.
Lowe has repeatedly emphasised limits to monetary policy and last month said further cuts in interest rates would not be in the national interest as the danger of a debt-fuelled boom and bust was just too severe. the governor signalling a high bar for a move lower, interbank futures 0#YIB: imply a mere 6 percent chance of another cut by August.
The Australian dollar AUD=D4 inched higher after the rate decision, supported by the outlook for steady policy.
A survey of business expectations by Dun & Bradstreet (NYSE:DNB) on Tuesday found business confidence was at an 18-month high while plans for capital investments for the second quarter of 2017 were at a two-year peak.
"Overall, the business sector's outlook for the economy has improved in the early part of 2017," said Stephen Koukoulas, Dun & Bradstreet economic adviser.
"The critical issue will be whether this optimism translates to a lift in actual activity."
($1 = 1.3149 Australian dollars)