AUD/USD bounced a little around 0.6580 to 0.6590 levels on the decision but that’s not indicative of much. The pair remains rangebound, stuck within a 19 pips range on the day. That is telling of the reaction to the RBA’s expected decision here. So, what’s the main takeaway that we can gather from their latest statement?
The hawkish hold remains as the RBA doesn’t change much in its statement. There is a continued emphasis that underlying inflation remains too high. That is no different from before.
However, this time around the central bank is putting emphasis on their latest forecasts from the Statement on Monetary Policy (SMP). They are making mention that they “do not see inflation returning sustainably to the midpoint of the target until 2026“.
And this is further stressed upon in their guidance paragraph in which they said:
“The November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint.”
That before mentioning again that they are not ruling anything in or out at this stage and that policy will need to be sufficiently restrictive until they are confident on inflation developments.
So, all in all there isn’t too much of a change in the language. The rates market is pinning the first rate cut for May next year but mind you, these expectations have been continually pushed back since the middle of this year already.