Australian Dollar: RBA pause may weigh on AUD into year-end - TD Securities
TD Securities’ Prashant Newnaha sees the Reserve Bank of Australia's (RBA) 25bp hike to 4.85%, its highest rate since 2008, as a conditional pause rather than the start of another tightening cycle.
The Reserve Bank of Australia (RBA) recently hiked its interest rate by 25 basis points to 4.85%, its highest level since 2008. However, Prashant Newnaha from TD Securities views this move as a conditional pause rather than the start of another tightening cycle. The RBA's decision was not unanimous, with three members favoring to keep rates at 4.60%.
This, along with a softer outlook on growth, suggests that the RBA may hold rates for an extended period. Newnaha expects the earliest rate cut to occur in November 2027, but an earlier cut could be possible if unemployment and housing activity deteriorate sharply. As a result, Newnaha anticipates the Australian Dollar (AUD) to underperform into the year-end.
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