AUD Sinks as RBA Governor Questions Further Rate Hikes

The Australian Dollar saw significant losses on Tuesday as investors reevaluated the chances of further interest rate hikes by the Reserve Bank of Australia (RBA). In a morning address, the RBA Governor questioned whether the three hikes this year have already done enough to control inflation.

Underlying inflation remains high and could rise further due to war-driven energy costs, while demand growth is still ahead of supply. The RBA is prepared to tighten again if needed, but the speech's framing did more damage than its content.

The question posed by the Governor, whether this year's hikes have already done the job, suggests that the committee may not be preparing for a further move. This has implications for the upcoming August meeting, which will decide on interest rates.