Australian Dollar: RBA holds hawkish bias with steady rates – ING

ING’s Chris Turner reports that the Reserve Bank of Australia kept rates at 4.35%, while Governor Sandra Bullock delivered a hawkish message, stressing upside inflation risks and revealing that a hike was discussed. Short-dated Australian yields reversed higher. ING’s FX team does not expect further RBA hikes this year but still projects AUD/USD rising toward 0.73 by year-end.

Hawkish RBA and AUD/USD upside

"The Reserve Bank of Australia left rates unchanged at 4.35% today. Some argue that the added description of the policy as 'somewhat restrictive' means that the RBA is less likely to hike in future."

"However, Governor Michele Bullock proved quite hawkish at the press conference, reminding the audience that the RBA sees inflation risks as skewed to the upside and admitting that the RBA did discuss the possibility of a rate hike at today's meeting."

"Our team does not see a further RBA rate hike this year, but from an FX perspective, we still see AUD/USD heading up to 0.73 by year-end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)