Australian Dollar: RBA policy pause maintained – TD Securities
TD Securities strategists expect the Reserve Bank of Australia (RBA) to leave the cash rate unchanged at 4.35%, noting that policy is already restrictive and that Australian activity, particularly housing, is slowing in response to earlier hikes.
TD Securities strategists forecast the Reserve Bank of Australia (RBA) to maintain the cash rate at 4.35% during their August policy meeting, suggesting the current stance is already restrictive and reflecting slowing economic activity, especially in the housing sector. The economists attribute this pause to lower-than-expected Q2 Consumer Price Index (CPI) figures, which provide the RBA with breathing room as policy remains restrictive and the full effects of earlier hikes have yet to take hold.
Although inflation forecasts may see limited adjustments despite rising oil prices, the odds of an actual rate hike remain minimal. The RBA's upcoming August statement of monetary policy will provide updated economic forecasts, but the analysts believe the central bank is unlikely to significantly lower its inflation projections amid heightened inflationary pressures from high oil prices.
Current expectations hold the cash rate steady at 4.35%, aligning with the consensus among market observers.
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