End of Australia’s rate tightening cycle?
Australia's central bank was ready to look at hitting the pause button on interest rate hikes even before the recent volatility caused by the banking sector, showed the latest minutes.
End of tightening?
Now, have we come to the end of the monetary tightening cycle in Australia? That is the question. At its March meeting, the Reserve Bank of Australia raised the cash rate by 25 basis points to 3.6%, meeting market consensus. But the minutes show that the central bank's members agreed to consider pausing in April to 'allow time to reassess the outlook of the economy'. This is even before the recent global banking system turmoil. The minutes did not rule out any further tightening.
Inflation
Inflation in Australia remains too high and the labor market still too hot but, not many out there believe that the RBA will resume tightening any time soon. Indeed, not only have traders priced out any chance of a further hike in the cash rate, but there is even a slim, slim risk of a cut at the April 4th meeting. Just a couple of weeks ago, rates were seen peaking at 4.1%.
Australian vs US dollar
Just want to pull up the AUD/USD for you right now against the dollar. Now this chart is showing a slight leveling off at the 6600. and it's heading upwards to 6691. If it breaks through the 6750 level, the next resistance point is 6800. We've seen a higher high there, but it remains anyone's guess whether this cross will continue to float higher. Of course, it depends what the Fed does as well.
Australian vs Sterling
Here's a look at GBP/AUD as well. Now, that cross has been heading higher since around the February mark there, as you can see. However, it has tapered off and is now stuck in that 18,200 area. This too will largely depend on what the Bank of England says about inflation, which is also still very high in the UK. But, many economists think that inflation has now peaked and is slowly coming back down. Of course, if the Aussie is holding back now on its tightening cycle and if the Bank of England does not follow suit, then we could see sterling continue to gain against the Aussie dollar.
Related articles
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
