RBA monetary policy decision – Overview
The Reserve Bank of Australia (RBA) is scheduled to announce its monetary policy decision this Tuesday, July 4, at 04:30 GMT and is expected to raise the cash rate by 25 bps to 4.35%. The markets, however, remain divided over the possibility that the central bank might keep its monetary policy unchanged. As Matías Salord, News Reporter at FXStreet explains:” The economic data still allows the RBA to raise rates further, and that is the main argument for a hike. At the same time, the central bank could pause at this meeting and resume the hike cycle later, which is what the interest rate market is indicating.” Hence, the focus will also be on the accompanying monetary policy statement, which will be closely scrutinized for fresh cues about the future rate-hike path.
Analysts at TD Securities offer a brief preview of the event and write: “Another line-ball call with cons. expecting no hike and OIS market pricing in ~50% prob of a 25 bps hike. Contrary to cons., we expect the RBA to hike. The labour market is too tight, upside retail sales beat for May, rebound in domestic housing prices in June and elevated household savings provides room for the RBA to continue its hike to return inflation back to target.”
How could the RBA decision affect AUD/USD?
Heading into the key central bank event risk, the AUD/USD pair is seen trading just below the one-week high touched on Monday and draws support from subdued US Dollar (USD) price action. Theoretically, a hawkish 25 bps RBA rate hike should provide a fresh boost to the Australian Dollar (AUD), though worries about economic headwinds stemming from rapidly rising borrowing costs should cap any meaningful upside.
In contrast, a dovish tilt will be enough to prompt aggressive selling around the growth-sensitive Aussie against the backdrop of worries about a global economic downturn. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside. Hence, any intraday positive move might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.
Key quotes
• Reserve Bank of Australia Preview: A close call, with AUD/USD vulnerable
• RBA Preview: Banks split between a pause and 25 bps hike after softer inflation
• AUD/USD Price Analysis: Further recovery hinges of 0.6700 breakout and RBA Interest Rate Decision
About the RBA interest 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 of the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

AUD/USD looks bid ahead of RBA Minutes
Finally, AUD/USD managed to regain a small smile on Monday and retested the 0.6250 zone after six consecutive days of losses, all against the backdrop of a sharp pullback in the US Dollar and ahead of the release of the RBA Minutes.

EUR/USD meets some resistance just above 1.0500
EUR/USD reversed part of the recent leg lower and surpassed the 1.0500 barrier in response to the intense and renewed selling pressure hitting the US Dollar on Monday, all amid a solid recovery in the risk complex.

Gold battling to recover the $2,900 mark
Gold continues to pull away from the multi-week low it set near $2,830 on Friday and trades above $2,880 in the second half of the day on Monday. The uncertainty surrounding the Trump administration's trade policy and retreating US yields after weak PMI data support XAU/USD.

Bitcoin drops under $90,000, are institutions truly long BTC?
Bitcoin (BTC) climbed to a high of $94,416 early on Monday before erasing newfound gains and dropping under $90,000 support.

Seven fundamentals for the week: Angst rises ahead of tariff deadline and full buildup to Nonfarm Payrolls Premium
A reality show in the White House – the world is still digesting the dressing down of Ukraine's President Volodymyr Zelenskyy in the White House, but markets have to focus on other actions of US President Donald Trump: tariffs. The dramas come in a week of top-tier data. It is time to fasten your seatbelts.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.