FX.co ★ Australian Dollar Holds Steady as RBA Stands Pat

On Tuesday, the Australian dollar held its ground near $0.625 following the decision by the Reserve Bank of Australia (RBA) to maintain its cash rate at 4.1%, a move that was largely anticipated. This decision comes after the RBA implemented its first rate cut in over four years this past February. Although the central bank noted that core inflation is easing in alignment with its forecasts, it stressed the necessity for increased assurance that this trend will continue. Significantly, the RBA has omitted its previous caution regarding further easing, indicating a subtle shift towards a more dovish outlook. Currently, market projections are anticipating a cumulative 100 basis points reduction in rates for the year, potentially lowering the cash rate to 3.35% by the year's end. These dovish forecasts gained momentum with recent data revealing that Australian retail sales in February grew at a slower pace than expected, highlighting a decline in domestic consumption. In the meantime, the Australian dollar fell nearly 1% on Monday, pressured by the impending enforcement of President Trump's reciprocal tariffs, which poses a challenge for the country's export-reliant economy.