The Reserve Bank of Australia kept rates steady but left room for further tightening, though markets doubt another hike this year.
The Australian Dollar (AUD) rose modestly against major peers after the Reserve Bank of Australia (RBA) held its Official Cash Rate at 4.35% for the second consecutive meeting. The decision matched expectations, but the RBA maintained a hawkish tone, citing upside inflation risks and signaling potential further tightening if needed.
The RBA’s statement and revised forecasts appeared less hawkish than anticipated, with analysts noting the central bank’s reluctance to commit to another rate hike. TD Securities said the bank’s projections do not support a near-term increase, raising the bar for additional tightening this year. Governor Michele Bullock emphasized progress on inflation is still needed before confidence in price stability is achieved.
Despite the RBA’s cautious stance, the AUD traded marginally lower at 0.7050 against the USD during European trading, reflecting market skepticism about another rate hike. Investors now await upcoming economic data for further direction.