The Reserve Bank of Australia maintained rates at 4.35% and signaled a data-dependent pause, weighing on the Australian dollar near term.
The Reserve Bank of Australia kept its cash rate target unchanged at 4.35% after three consecutive 25bps hikes since February. The decision matched market expectations but failed to sustain AUD/USD gains from the prior session’s US-Iran peace agreement rally, with the pair retracing part of those moves.
The RBA reiterated its data-dependent stance, leaving the door open for further tightening if needed. However, analysts suggest market pricing for another hike may be overdone, with Australia-US 2-year bond yield spreads pointing to potential AUD/USD downside toward 0.7000 in the near term.
The central bank’s cautious tone contrasts with its recent tightening cycle, as policymakers assess incoming economic data before committing to further action.