AUD/USD Little Changed as RBA Opts for Status Quo Post Rate Cut
- The Australian Dollar was little changed against its major peers after the RBA policy announcement
- The Reserve Bank of Australia maintained its status quo forecast after cutting rates back in August
- No dovish surprise as the markets no longer price in at least 1 RBA rate cut over the next year
The Australian Dollar showed a reserved reaction against its major counterparts after the RBA’s latest monetary policy announcement crossed the wires. Having just cut rates back in August and opting for await-and-see approach in September, the markets were likely looking for any signs that the central bank would shift from its now passive stance.
Similar to the previous assessment, the Reserve Bank of Australia maintained the status quo that holding the stance of policy unchanged today would be consistent with sustainable growth in the economy and achieving the inflation target over time. They added that turnover in the housing market has declined and that the rate of gains in house prices is lower than it was a year ago. Commenting on the labor market, the central bank expects continued expansion in employment in the near term.
Since September’s RBA interest rate decision, the markets have been slowly losing momentum in their dovish RBA forecasts. Overnight index swaps no longer foresee the RBA reducing its benchmark lending rate again over the coming 12 months. The outlook has moderated to about a 76 percent chance. With that in mind, the Reserve Bank of Australia likely failed to inspire near-term easing bets today, persisting on the wait-and-see approach.