At its July policy meeting, the Reserve Bank of Australia (RBA) board members decided to leave the Official Cash Rate (OCR) unchanged at 4.10%, disappointing the markets.

The latest Reuters poll showed there was a near split among economists with 16 of 31 foressing another 25 bps rate hike to 4.35% at the July 4 meeting. The remaining 15 expected a pause.

The Australian central bank raised interest rates by 25 bps in May and June, delivering two consecutive hawkish surprises.

AUD/USD reaction

In a knee-jerk reaction to the RBA decision, the AUD/USD pair dropped over 40 pips to test 0.6650. The pair is down 0.25% on the day.

AUD/USD: 15-minutes chart

About RBA rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.