The Reserve Bank of Australia keeps interest rates at 4.35%, as expected. He says further rise cannot be ruled out.

• Previous 4.35%
• While recent data suggests that inflation is declining, it remains high. The Council expects this to be the case
  Some time yet Before inflation sustainably reaches the target range
• Inflation continued to decline in the December quarter. Despite this progress, inflation remains high at 4.1 percent.
• Commodity price inflation was lower than the RBA's forecast for November.
• However, services price inflation fell at a more gradual pace in line with the RBA's previous forecast and remains elevated.
• While there have been positive signs of goods price inflation overseas, service price inflation has persisted and the same could happen in Australia.
• Wage growth has rebounded but is not expected to rise much further and remain in line with the inflation target
• The outlook remains highly uncertain.
• Although there are encouraging signs, the economic outlook is uncertain and the Board remains highly attentive to inflation risks
• Service price inflation is expected to decline gradually as demand moderates and growth in labor and non-labor costs declines.
• The Governing Council must be confident that inflation is moving sustainably towards the target range.
• To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case
• The Reserve Bank of Australia will hold a press conference one hour after the decision

AUD/USD was trading at 0.6493 just before the release, up 11 pips on the day so far, but yesterday's low of 0.6469 was the lowest since November 16.

Ahead of the release, the August 6 meeting was priced in at 93% for the first rate cut of the cycle with 44 basis points by the end of the year.

I was disturbed by the following statement: “The Governing Council needs to be confident that inflation is moving sustainably towards the target range.” It's a plain copy/paste of what the ECB, Fed and others have said. Is it too much to ask someone to abandon groupthink? Or at least pretend to?

However, the Australian dollar rose almost 10 pips after the release of the report, which carried the phrase “further increase in interest rates cannot be ruled out” suggesting that this is not a shift to a neutral stance.