The Reserve Bank of Australia not only kept the interest rate unchanged but also seemed less enthusiastic about raising it again.

This morning, the Reserve Bank of Australia (RBA) decided to maintain the interest rate at 4.10%, while the previous consensus had anticipated an increase to 4.35%. As a result, AUD/USD plunged more than 0.8%, and AUD/NZD dropped by approximately 0.5%.

AUD/USD

This RBA interest rate announcement is considered dovish. They kept the interest rate unchanged and seemed less enthusiastic about raising it again shortly.

Experts believe the RBA's decision is appropriate given the current economic conditions in Australia. Moreover, the RBA will likely refrain from raising interest rates again shortly.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks," Philip Lowe, the RBA governor, said in the accompanying statement.

David Bassanese, the Chief Economist of Betashares, mentioned that the RBA is closely observing signs of easing core/service sector inflation globally. He also expressed the likelihood that unless there is a sudden surge in inflation, the last interest rate hike from RBA in this cycle has likely already occurred.

Similarly, Matt Simpson, Senior Analyst at City Index, commented to Reuters that he believes it is appropriate for RBA to keep rates unchanged today, considering the alignment of unemployment and inflation figures with RBA's projections. He also noted that it would be perplexing if RBA were to raise rates after weaker retail trade and inflation data.

Yesterday, the Australian Dollar (AUD) rose briefly due to news about China's broader-scale additional stimulus plan. However, its rally was later hindered by reports of ongoing contraction in China's manufacturing sector. The RBA's interest rate announcement further restrained the movement of the Aussie.