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21/05/24
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AUD Flat After RBA Minutes
On Tuesday, the Australian dollar inched down but recovered in the Asian session. AUD/USD showed little movement and traded at about 0.6660 in the European session.
The minutes of the RBA’s meeting earlier in the month showed that members discussed a rate hike before they decided to keep the cash rate at 4.35% for the 4th consecutive time. This was already known after the meeting and the Australian dollar’s reaction was muted.
The minutes showed that the risks around the Reserve Bank of Australia’s forecasts were “balanced”, which indicates that members will likely continue their stance of “higher for longer”.
The RBA doesn’t forecast that inflation will drop back to the target of between 2% and 3% until late in 2025, which likely means that rate cuts won’t be implemented before the middle of next year. If inflation however hits the target earlier than anticipated, this may change.
Although Governor Bullock has pushed back against speculation of cutting rates in the short term, some analysts expect rates to be cut before the end of this year. The RBA has not provided forward guidance and has said that the rate path would depend on the data.
Australia’s Westpac Consumer Sentiment was disappointing and dropped by 0.3% to 82.4 in May, after April’s slide of 2.4%.
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