AUD Holds Steady as RBA Maintains Hold Bias Amid Elevated Inflation

The Australian Dollar (AUD) held steady on February 28, after the latest inflation data reinforced expectations that the Reserve Bank of Australia (RBA) will maintain its current interest rate stance. The January Consumer Price Index (CPI) report showed annual inflation at 3.4%, matching consensus forecasts and remaining within the RBA's target band.

ING economists noted that the RBA's 'hold bias' is likely to persist, as policymakers seek more evidence that inflation will sustainably return to the 2-3% target midpoint. The trimmed mean inflation rose 3.8% year-on-year, still above the RBA's comfort zone.

The AUD traded in a narrow range against the US Dollar, hovering near $0.6500 in the Asian session. ING cautions that the AUD's upside may be limited in the short term, as global risk sentiment and the US Federal Reserve's policy path remain key drivers.