Australian Dollar Rallies on RBA Hike Bets
The Australian dollar rose above $0.70, extending its rally to a more than three-week high as hawkish comments from a top central bank official boosted the odds of another interest rate hike. RBA Deputy Governor Andrew Hauser said tighter monetary policy was working, but warned that the inflation outlook remained “materially worse” partly due to elevated oil prices. Hauser stressed the need to anchor inflation expectations ahead of the RBA’s November 3 policy meeting, where policymakers will consider whether to raise rates for a fifth time this year. Markets now price in a 44% chance of a November hike, up from 30% at the start of the week, while the probability of a December move has climbed to 64%. Focus now turns to third-quarter inflation data due next week. Core inflation is expected to rise 1.0% quarter-on-quarter, up from 0.9% previously. Annual core inflation is also projected to remain at 3.5%, well above the RBA’s 2%-3% target range.
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The Australian dollar rose above $0.70, extending its rally to a more than three-week high as hawkish comments from a top central bank official boosted the odds of another interest rate hike. RBA Deputy Governor Andrew Hauser said tighter monetary policy was working, but warned that the inflation outlook remained “materially worse” partly due to elevated oil prices. Hauser stressed the need to anchor inflation expectations ahead of the RBA’s November 3 policy meeting, where policymakers will consider whether to raise rates for a fifth time this year.
Markets now price in a 44% chance of a November hike, up from 30% at the start of the week, while the probability of a December move has climbed to 64%. Focus now turns to third-quarter inflation data due next week. Core inflation is expected to rise 1.0% quarter-on-quarter, up from 0.9% previously. Annual core inflation is also projected to remain at 3.5%, well above the RBA’s 2%-3% target range.