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06/08/24
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AUD Still Under Pressure as RBA Keeps Rates Unchanged
On Tuesday, the Australian dollar gained but later reversed directions and has inched down. AUD/USD traded at about 0.6778, down 0.24% for the day in the European session.
On Tuesday, the Reserve Bank of Australia kept its cash rate at 4.35% for the 7th consecutive time. The markets had priced in the move fully and the Australian dollar hardly reacted.
RBA Governor Bullock said at her press conference that policymakers had explored hiking rates at the meeting today. This has become normal for the RBA, which discussed hiking rates in prior meetings but elected to hold rates steady each time.
Bullock unexpectedly said that the central bank was not likely to cut interest rates for at least 6 months as inflation was still too high.
Although Bullock added that the markets were slightly ahead of themselves in pricing in rate cuts, markets still expect the Bank will start cutting rates before the end of this year. The RBA’s latest forecast is that inflation, which increased to 3.8% in the second quarter, would not drop to the midpoint of the target band of between 1% and 3% until mid-2026.
Although the RBA Governor noted the unexpected meltdown in global stock markets, she said this development had not been factored into today’s rate decision.
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