Australian dollar: “Hawk” decrease or pause? The opinions of analysts diverge
The expected reduction in the interest rate of Australia (RBA) next week causes violent discussions among analysts. Despite the general expectation of a decrease, opinions diverge regarding his character and influence on the Australian dollar (Aud).
"Hawk" decrease?
David Forreter from Crédit Agricole suggests that even with a decrease in the rate, RBA can take a “hawk” position. He explains this with a stable positive impulse for basic inflation.Thus, a decrease in the rate will be more likely a measure of precaution than a signal of deep anxiety about economic growth.
In: cautious optimism and potential for further reduction
ING analysts believe that the RBA will be careful in their forecasts, but its position can become more “pigeon”. They expect this to indirectly support the market expectations of two additional reductions in the rate in 2025.Earlier, the markets laid a decrease in 50 basic points, but the mitigation of the trade tension between the United States and China, as well as a slower decrease in inflation than expected, strengthened positions in favor of reducing 25 basic points.
ING also sees the potential for AUD/USD growth, despite the reduction in RBA rates. They associate this with negative news from the United States and improving the mood regarding risks, and expect a return to 0.650.
Commerzbank: Arguments in favor of a pause
Commerzbank takes a more conservative position. Bank analysts believe that the preserved stability in the labor market and inflation, which turned out to be slightly higher than expected, rather speak in favor of a pause, and not a decrease in the interest rate.In addition, the mitigation of the tariff dispute between the United States and China reduces the need for a preventive reduction in the rate due to fears about the economic weakness of Australia as an important trading partner of China.
Commerzbank does not exclude that the RBA will leave the key rate without changes at the level of 4.10%. In this case, in their opinion, the Australian dollar can strengthen in the short term.However, in the medium term, they retain skepticism in relation to AUD, fearing the negative influence of China’s economic weakness and low growth potential.
Conclusion
The opinions of analysts regarding the decision of the RBA and its influence on the Australian dollar were divided. While most expects to reduce the bet, its nature and consequences remain the subject of discussions.Investors should carefully monitor the statements of the RBA and take into account various points of view when making investment decisions.The key factors affecting the dynamics of AUD will remain inflation, the state of the labor market, the economic situation in China and common moods in world markets.
