Australian Dollar: Policy risks balanced as inflation lingers – Standard Chartered
Standard Chartered’s Nicholas Chia reports that the Reserve Bank of Australia (RBA) kept the cash rate at 4.35% in a unanimous decision, as widely expected. Chia notes the RBA sees inflation returning to the midpoint of its 2–3% target only by late 2027.
Standard Chartered’s Nicholas Chia reports that the Reserve Bank of Australia (RBA) maintained the cash rate at 4.35% in a unanimous decision, as anticipated. The RBA anticipates inflation to only return to the midpoint of its 2-3% target by late 2027, citing ongoing capacity pressures and increased fuel prices as contributing factors.
Governor Bullock emphasized the uncertainty surrounding the RBA's forecasts during the press conference, hinting at the possibility of further policy tightening if inflation pressures persist. Chia's base case remains no additional RBA rate hikes in the near future, with the main risk being another hike in Q4 if demand does not decelerate or energy prices spike again.
Despite the inflation concerns, easing labour market conditions could help keep wage and price pressures in check if they persist.
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