RBA confirms neutral bias

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"While the decline in the exchange rate from its highs a year earlier would assist in achieving balanced growth in the economy, this would be less so than previously expected given the rise in the exchange rate over the past few months"
-RBA minutes


The Australian Dollar traded slightly lower on Tuesday versus other major currencies, with AUD/USD sliding back to 0.9394 and EUR/AUD rising to 1.4719 after the release of the RBA minutes.

As it was widely expected, minutes only reaffirmed central bank's neutral bias and pointed out further signs that a period of stable interest rates is vital for rebalancing economic activity. During the last meeting the RBA left its key refinancing rate at 2.5%. Minutes showed that policymakers' view that the most prudent course of the monetary policy was likely a period of stability in interest rate. What is more important, the minutes showed the RBA sees a slight improvement in the labour market, while conditions still need to improve further before the jobless rate starts to decline on a steady pace. The meeting was held before March unemployment was unveiled that showed the indicator fell to 5.8% from 6.0% a month earlier. At the same time, amid a drop in the mining sector, there were noted promising signs in other parts of the economy, including stronger dwelling investment and signs of a pickup in domestic consumption. A 10.5% surge in housing prices over the last year also suggests the property market can become one of the main drivers.

While the economy is building up steam, some can claim the time has come to raise borrowing costs, however, the RBA has made it clear they are not in any hurry to make a rate hike.
© Dukascopy Bank SA

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