The Australian dollar fell in European trade on Tuesday against a basket of major rivals, moving away from two-month highs against the US dollar and becoming the worst performing major currency.

The losses came after the Reserve Bank of Australias policy meeting, which pretty much ruled out the prospects of additional interest rate hikes this year.

RBA Governor Michele Bullock said the committee discussed raising interest rates, but reached an agreement that monetary policies are tight enough already and appropriate for the goal of bringing inflation towards the 2% target.

The Price

AUD/USD fell 0.6% today to 0.6587, with a session-high at 0.6644.

The pair rose 0.25% yesterday, the fourth profit in a row, scaling a two-month high at 66.50 on Friday following weak US labor data.

Worst Performing Currency

Aussie became the worst performing G8 currency today, with a 0.6% drop against the US counterpart, and a 0.5% decline against both the euro and the pound.

It also fell 0.4% against the Swiss franc, and 0.3% against yen, and 0.4% against the Canadian dollar, and 0.35% against the New Zealand dollar, away from 11-month highs.

The RBA

As expected, the Reserve Bank of Australia voted to maintain interest rates unchanged at 4.35%, the highest since November 2011.

In its policy statement, the RBA asserted the importance of bringing inflation to targets in a reasonable time frame, while noting that inflation remains relatively high for the time being.

It noted that the interest rate path remains unconfirmed and will rely on upcoming data.

RBA Forecasts

The RBA expects inflation to rise to 3.8% and remain at this level for the rest of the year, before returning to 2-3% in the second half of 2025.

The RBA expects inflation to fall further between 2025 and 2026.

Michele Bullock

RBA Governor Michele Bullock reiterated the importance of remaining vigilant with inflation risks. She noted that current interest rates are appropriate for the aim of reducing inflation to targets.

She said the data has proved the task difficult, with the bank taking a longer term approach.

Bullock said theres no need to tighten monetary policies any further for the foreseeable future.