AUD Surges Despite RBA Hawkish Tone Fails to Spook Markets

The Australian Dollar (AUD) has outperformed its major currency peers despite the Reserve Bank of Australia's (RBA) hawkish tone failing to sway markets.

In its latest monetary policy announcement, the RBA left the Official Cash Rate (OCR) unchanged at 4.35% for the second time in a row as expected, but kept the possibility of a fourth interest rate hike this year on the table due to upside inflation risks.

RBA Governor Michele Bullock stated that 'the board hopes to slow the economy, sees upside risks to inflation,' and added, 'we will raise rates again if needed.'

Analysts at Standard Chartered note that the RBA is keeping a flexible stance on policy despite holding the cash rate steady. They stress that their base case remains no more RBA rate hikes in the foreseeable future.