As it was highly anticipated, the Reserve Bank  of Australia left the target cash rate unchanged at 4.5% at its Tuesday meeting. The statement by the Governor Glenn Stevens cites the uneven global growth, European sovereign debt issues, moderate growth in China and strains in US labor market as few of the reasons behind the decision.

While it points out that higher terms of trade will increase domestic income and demand, and the housing market keeps growing modestly, the language is still very cautious, and it seems that RBA will leave the cash rate unchanged at August meeting as well.

The report also states that the CPI is expected to be a little above 3% in the near term because of higher tobacco taxes and utility prices. Investors will now watch closely the CPI number before the next RBA meeting, as a significantly higher than forecasted inflation number could still result in an immediate rate hike.

The Australian Dollar (AUD) changed very little against the other major currencies, as the decision was widely expected and already priced in. The AUD/USD pair is currently trading just above 0.84, while the AUD/JPY has had a modest gain, moving from 73.25 to 73.60s. The biggest move was against the Euro (EUR) as the EUR/AUD fell from 1.4980s to 1.4918.