AUD: moving lower again. Overview for 04.07.2023
The Australian dollar witnessed a renewed decline against the US dollar on Tuesday. The current AUDUSD quote is at 0.6653.
The Reserve Bank of Australia (RBA) kept the interest rate unchanged at 4.1% per annum, marking the second pause in the monetary policy structure this year. The board of directors was said to need more time to assess the economic consequences of more than a year of tightening cycles.
In the comments, the RBA states that further rate hikes may be necessary to bring inflation back to the target range within a reasonable time frame. This is a customary statement, as it allows the CB room for manoeuvre. The RBA is known for its flexible approach to monetary policy.
A staccato-like pattern in the monetary policy is formed in this way: rate hikes in February and March, a pause in April, further hikes in May and June, and a pause in July. This contrasts with the more consistent and rigid rate cycles of the Fed and ECB. They have both adopted more predictable rate patterns.
The RBA's inflation target remains at 2-3%. The consumer price index currently exceeds 6%, which means there is ample room for policy action.
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