Australian Dollar Falls Despite 5th RBA Hike
The Australian dollar fell below $0.70, hitting a two-week low despite the central bank’s widely anticipated interest rate hike. In a majority 6-3 decision, the Reserve Bank of Australia raised its cash rate target by 25 bps to 4.85%, marking the fifth increase this year and taking borrowing costs to their highest since late 2008. The decision highlighted persistent, broad-based inflation, driven by elevated fuel and commodity prices, domestic capacity constraints and AI-related demand for technology goods. However, the hike was largely priced in, while the divided vote and lack of hawkish guidance reduced expectations of another increase at the next meeting, prompting a sell-off in the currency. Rate hike expectations rose sharply last month as hawkish RBA comments were reinforced by a hotter-than-expected CPI report. Markets now await Governor Michele Bullock's press conference later today, where she is expected to address the outlook for further rate moves.
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The Australian dollar fell below $0.70, hitting a two-week low despite the central bank’s widely anticipated interest rate hike. In a majority 6-3 decision, the Reserve Bank of Australia raised its cash rate target by 25 bps to 4.85%, marking the fifth increase this year and taking borrowing costs to their highest since late 2008. The decision highlighted persistent, broad-based inflation, driven by elevated fuel and commodity prices, domestic capacity constraints and AI-related demand for technology goods.
However, the hike was largely priced in, while the divided vote and lack of hawkish guidance reduced expectations of another increase at the next meeting, prompting a sell-off in the currency. Rate hike expectations rose sharply last month as hawkish RBA comments were reinforced by a hotter-than-expected CPI report. Markets now await Governor Michele Bullock's press conference later today, where she is expected to address the outlook for further rate moves.