The benchmark S&P/ASX200 index on Tuesday fell for the fifth time in the past six sessions, dropping 81.1 points, or 0.91 per cent, to 8,813.7, while the broader All Ordinaries slid 84.3 points, or 0.92 per cent, to 9,098.2.
The ASX200 spiked 23 points in the space of two minutes after the RBA left interest rates on hold on Tuesday afternoon, but ultimately gave back all of that brief burst and then some.
The market was spooked by the hawkish tone of the central bank's commentary, which painted a gloomy picture of the Australian economy, Capital.com analyst Kyle Rodda said.
"Fundamentally, the RBA is cognisant, if not concerned, that inflation could remain above target longer than the nearly three quarters it now forecasts that trimmed mean CPI will remain above three per cent," Mr Rodda said.
Vanguard senior economist Grant Feng said the fund giant saw limited scope for further rate cuts in 2025, with the Australian economy operating near its full capacity, core inflation rising and unemployment still low.
Ten of the ASX's 11 sectors finished lower, with health care up marginally.
The utilities sector was the biggest loser, falling 2.8 per cent after the Albanese government introduced a "solar sharer" scheme that would force electricity retailers to offer three hours of free electricity to households in NSW, southeast Queensland and SA from July.
Origin Energy lost 3.8 per cent and AGL retreated 3.7 per cent.
Three of the big four banks finished lower, with CBA dropping 0.8 per cent to $174.11, NAB retreating 0.5 per cent to $43.79 and ANZ dipping 0.4 per cent to $36.83.
Westpac was the outlier, rising 1.5 per cent to $40.42.
In the heavyweight mining sector, BHP lost 1.9 per cent to $42.53, Rio Tinto dropped 2.6 per cent to $129.40 and Fortescue declined 2.7 per cent to $20.49.
Goldminers were mixed as the yellow metal dropped back under $US4,000, changing hands at $US3,988 an ounce.
Northern Star dipped 1.9 per cent and Evolution lost 2.0 per cent, while Regis Resources added 0.8 per cent and Greatland Resources climbed 1.0 per cent.
Uranium miner Boss Energy was the biggest loser in the ASX200, falling 5.9 per cent, while defence contractor Droneshield was the biggest winner, climbing 8.6 per cent.
City Chic Collective surged 8.8 per cent on a sales update, with the plus-size women's clothing retailer saying its US business had traded ahead of expectations despite the tariff uncertainty.
ON THE ASX:
* The S&P/ASX200 dropped 81.1 points, or 0.91 per cent, to 8,813.7
* The broader All Ordinaries fell 84.3 points, or 0.92 per cent, to 9,098.2
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 65.28 US cents, from 65.59 US cents at 5pm on Monday
* 100.38 Japanese yen, from 101.09 Japanese yen
* 56.70 euro cents, from 56.87 euro cents
* 49.74 British pence, from 49.91 British pence
* 114.74 NZ cents, from 114.51 NZ cents
16°C