The Australian dollar fell in European trading on Tuesday against a basket of major currencies, extending its losses for the fifth consecutive session against its U.S. counterpart and hitting a two-week low following the latest policy meeting of the Reserve Bank of Australia (RBA).

The central bank kept interest rates unchanged, in line with most market expectations, marking the second consecutive meeting without a move. It also warned that inflationary pressures in the economy remain persistent, weakening the outlook for a potential rate cut in December.

Price Overview

Todays exchange rate: The Australian dollar fell 0.3% against the U.S. dollar to 0.6518 its lowest since October 24 down from the opening level of 0.6536, after recording a session high of 0.6541.

On Monday, the currency closed 0.1% lower versus the dollar, marking its fourth straight daily loss following weak economic data from China, Australias largest trading partner.

Reserve Bank of Australia

As expected, the RBA on Tuesday decided to leave its benchmark cash rate unchanged at 3.60%, the lowest level in nearly two and a half years, for the second consecutive meeting. The decision was unanimous among members of the Monetary Policy Committee.

The RBA Keeps Rates Unchanged for the Second Consecutive Meeting

The central bank projected that core inflation will remain above target until after mid-2026 and warned that inflationary pressures continue to persist based on the latest data.

The labor market has improved slightly, though it remains somewhat tight, the RBA said, adding that household consumption appears to be recovering at a slightly faster pace than expected.

The statement noted that the Board remains focused on its mandate to achieve price stability and full employment, and will take whatever action is deemed necessary to meet these goals.

Michele Bullock

RBA Governor Michele Bullock said on Tuesday:

Its possible there may be no further rate cuts, but its also possible there could be some additional easing.

We discussed maintaining the current stance and its future outlook, and we are proceeding cautiously.

We did not consider an immediate rate cut.

There may be less need for monetary easing in this cycle compared to previous ones.

Australian Interest Rate Outlook

Following the meeting, market pricing for a 25-basis-point rate cut by the RBA in December fell from 65% to 35%.

Investors now await upcoming data on inflation, unemployment, and wages to reassess expectations for monetary easing in Australia.