The Australian dollar softened on March 17 following a high-stakes Reserve Bank of Australia meeting where a cash rate hike was delivered by the narrowest of margins.
While the central bank lifted the cash rate by 25 basis points to a 10-month high of 4.10%, the decision was secured by a slim 5-4 majority.
The razor-thin split—the closest since the RBA began disclosing voting patterns last year—immediately led markets to reassess the likelihood of further tightening.
Consequently, the Aussie eased 0.1% to $0.7059, retreating from an overnight rally that had tested a 45-month peak of $0.7122.
The RBA's hawkish tone underscored persistent inflation risks, exacerbated by a spike in petrol prices linked to escalating conflict in the Middle East.
With core inflation currently sitting at 3.4%—stubbornly above the bank's 2% to 3% target range—officials warned that risks remain tilted to the upside.
However, the internal division regarding the "live" meeting suggests that future hikes are no longer a certainty.
Market pricing for a follow-up increase in May plummeted from 70% to just 25% following the announcement.
The domestic bond market responded with 10-year yields falling 5 basis points to 4.941%, as investors balanced the RBA's cautious stance against a backdrop of global uncertainty.