somrat4030
Well-known member
Feb-01, 2022, Reserve Bank of Australia Rate Decision, Explain By forex forum.
The Bank of England delivered a 15 bps rate hike, and now the Reserve Bank of Australia (RBA) is starting to tighten their policy as well, with the QE program due to end in February. But, the RBA still remains well behind the FED in this regard, which means that the USD will keep the upper hand against the AUD, so we are preparing to sell AUD/USD here at the 50 SMA (yellow), since that moving average has provided resistance before.
Reserve Bank of Australia Rate Decision
1. RBA holds the Cash Rate at 0.10%, as expected2. Prior rate was 0.10%
3. Ends QE, with final purchases to take place on Feb 10
4. Prior pace of QE was A$4 billion/week
5. While inflation has picked up, it is too early to conclude that it is sustainably within the target band
6. Repeats that it "will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range"
7. There are uncertainties about how persistent the pick-up in inflation will be as supply-side problems are resolved
8. RBA balance sheet is around $640 billion
9. RBA will consider the issue of balance sheet reinvestment in May.
10. Wages growth also remains modest, and it is likely to be some time yet before aggregate wages growth is at a rate consistent with inflation being sustainably at target
11. RBA says it is "prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve"
On the other hand, "Australia's economy appears to be on a sturdy upturn, with a rebound in activity and quickening of inflation in the final quarter of 2021. Despite some near-term uncertainties, we believe these more solid economic trends can continue in 2022."
"We believe inflation will remain elevated in the coming quarters and that by late this year the RBA will be confident enough to begin raising rates. Accordingly, we have made a modestly hawkish shift on our own monetary policy outlook, and now forecast an initial 15 bps rate hike in November 2022 and a cumulative 100 bps of rate hikes in 2023."
Source: fxstreet.com/news
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