Australia’s dollar pared gains against its U.S. counterpart after minutes from the Reserve Bank’s last meeting pared expectations policy makers will increase interest rates to combat inflation. The so-called Aussie failed to offset a three-day decline after the central bank said there was “more time” to assess price pressures. The New Zealand dollar traded 0.5 percent from a record high against the greenback. “The big thing in the minutes is they dropped the reference to need for tighter policy at some stage,” said Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole SA in Hong Kong. “The fact that they have now dropped that reference is obviously playing negatively for the Aussie dollar.” Australia’s currency was at $1.0615 as of 1:37 p.m. in Sydney from $1.0607 in New York yesterday, trimming earlier gains to $1.0651. New Zealand’s dollar traded at 84.58 U.S. cents from 84.50 cents, close to the record 85.07 cent record reached on July 14. The Aussie climbed 0.1 percent to 83.93 yen, while the so-called kiwi was at 66.88 yen from 66.79 yen. “The flow of recent information suggested both that there was more time to assess the likely strength of inflationary pressures in Australia and that it would be prudent to use that time,” according to the minutes released today of the RBA’s July 5 meeting. Minutes from the June meeting released last month showed that an acceleration in inflation from commodities-led growth “suggested that further tightening in monetary policy would be necessary at some point.” 100% Chance RBA Governor Glenn Stevens has kept the official cash rate unchanged at 4.75 percent since November as the economy recovered from floods. Cash-rate futures show a 100 percent probability the RBA will lower borrowing costs by December, Sydney Futures Exchange contracts show. “The RBA is likely to ‘stay its hand’ in terms of tightening near term,” Gavin Stacey, an interest-rate strategist in Sydney at Barclays Capital, and Joaquin Vespignani, an economist at the company, wrote in a research note today. "But, in our view, rate hikes rather than rate cuts are on its mind." Euro-area leaders will meet in Brussels on July 21 to discuss efforts to halt the crisis, European Union President Herman Van Rompuy said in a statement on July 15. “Concern about Europe’s debt problems spurs risk aversion through a drop in stocks,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “We should be bearish” on the Australian and and New Zealand currencies for the near term, The MSCI Asia Pacific Index of regional shares fell for a fourth day, losing 0.2 percent. The Standard & Poor’s 500 Index slid 0.8 percent in New York yesterday. To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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