Australian shares fell after a Wall Street recovery stalled overnight and the Reserve Bank warned it "would not hesitate to raise rates if it needs to".
The ASX 200 finished 18 points or 0.23% in the red, but well off its intraday nadir. The index retested Monday's closing low before trimming its decline by almost 40 points.
The major banks led the partial intraday turnaround after the RBA made it clear rate hikes are by no means off the table. Governor Michele Bullock used a speech in Armidale this afternoon to reiterate the bank's commitment to crushing inflation.
"The Board remains vigilant with respect to upside risks on inflation and will not hesitate to raise rates if it needs to. I know this is not what people want to hear. But the alternative of persistently high inflation is worse. It hurts everyone," Bullock said.
The market faced early pressure after a rocky night in the US amid questions whether the recent explosion in volatility had passed. The S&P 500 shed 0.77% during its fourth losing session in the last five.
