The Reserve Bank of Australia decided on Tuesday morning to keep its main borrowing rate unchanged at 4.35% for the sixth consecutive meeting, in line with widespread expectations, after the RBA raised interest rates by the last time in four previous meetings in November, in the context of curbing high inflation.
The Reserve Bank of Australia's decision to hold interest rates steady comes in response to a slowdown in Australia's consumer price index to 3.8% in June, after the country had recorded an increase in the annual inflation rate of 4.0% in May.
Despite the bank changing its inflation forecasts, and the governor warning that inflation pressures are still ongoing, the latest inflation figures released in Australia showed a higher than expected rise over the past month, which prompted the Reserve Bank of Australia to keep interest rates largely unchanged at this meeting.
Short-term interest rates are one of the most important factors in evaluating the Australian dollar, as traders look only at most other indicators to predict how prices will change in the future, and an interest rate hike is often positive for the currency, and vice versa.
