RBA policy remains unchanged

Source: Dukascopy Bank SA
On May 4, the Reserve Bank of Australia made a rate statement. The event caused a minor move upwards, as the bank essentially revealed that it would not change its monetary policy.

Quoting the statement's key points: "The global economy is continuing to recover from the pandemic and the outlook is for strong growth this year and next. The recovery remains uneven, though, and some countries are yet to contain the virus. Global trade in goods has picked up strongly and commodity prices are mostly higher than at the start of the year. However, inflation remains low and below central bank targets.

Despite the strong recovery in economic activity, the recent CPI data confirmed that inflation pressures remain subdued in most parts of the Australian economy. A pick-up in inflation and wages growth is expected, but it is likely to be only gradual and modest.

At its July meeting, the Board will consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity, the November 2024 bond. The Board is not considering a change to the target of 10 basis points. At the July meeting, the Board will also consider future bond purchases following the completion of the second $100 billion of purchases under the government bond purchase program in September."

It can be assumed that changes could take place in July.

Full Official Release

Statement by Philip Lowe, Governor: Monetary Policy Decision

In the immediate aftermath after the statement, the AUD/USD made a minor bounce of twelve pips to the upside.

Initial Reaction

Larger scale situation

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