- The Australian Dollar retreats to near 1.2150 against the New Zealand Dollar after the RBA’s monetary policy announcement.
- The RBA has left its OCR steady at 4.35% after three back-to-back interest rate hikes.
- The Australian central bank has stated that short-term measures of inflation expectations have eased.
The Australian Dollar (AUD) falls back to near 1.2150 from its intraday high of 1.2168 against the New Zealand Dollar (NZD) after the Reserve Bank of Australia’s (RBA) monetary policy announcement. The Australian central bank has announced a pause on its monetary-tightening cycle by leaving the Official Cash Rate (OCR) steady at 4.35%, as expected.
In all three policy announcements so far this year, the RBA raised interest rates by 25 basis points (bps).
The RBA was expected to leave interest rates unchanged as latest Australian inflation data showed that the Consumer Price Index (CPI) has started cooling down and employment conditions appear to be worsening.
In April, Australia’s CPI arrived lower at 4.2% Year-on-Year (YoY), missed 4.4% estimates and the prior reading of 4.6%. The Unemployment Rate jumped to 4.5% from expectations and the previous reading of 4.3%.
In the monetary policy statement, the RBA has stated that short-term measures of inflation expectations have eased, but remain higher than earlier in the year. On external shocks, the RBA said, “Global oil supply issues will take some time to resolve, maintaining upward pressure on global energy prices and inflation.”
In New Zealand (NZ), investors await the Q1 Gross Domestic Product (GDP) data, which will be released on Thursday. The NZ economy is expected to have expanded at a stronger pace of 0.9% against the previous reading of 0.2%.
