Traders dialled back expectations that the Reserve Bank will have to raise interest rates again this year, after central bank governor Michele Bullock said monetary policy was restrictive enough.

The RBA, as expected, kept the cash rate on hold at a 12-year high of 4.35 per cent for a fourth consecutive meeting on Tuesday, but cautioned that while inflation was moderating, its pace had slowed and remained high, signalling that interest rates will stay high for longer.