Interest rates on hold, but RBA stands ready to cut if dollar stays high

Financial markets are pricing in around a one-in-three chance of rates falling next month, with a 50 per cent chance of a cut by August.

The Reserve Bank has attempted to lift those expectations, with its governor Glenn Stevens warning that a rising Australian dollar could push it to cutting rates again.

"The Australian dollar has appreciated somewhat recently. In part, this reflects some increase in commodity prices, but monetary developments elsewhere in the world have also played a role," he wrote in his post-meeting statement.

"Under present circumstances, an appreciating exchange rate could complicate the adjustment under way in the economy."

The Australian dollar did not do what Mr Stevens wanted after the announcement, rising around 25 basis points to 76.2 US cents by 2:45pm (AEST).