RBA Holds Rates, AUD Under Pressure Ahead

The Reserve Bank of Australia (RBA) has kept interest rates unchanged in its latest decision, contrary to speculation that there might be a dissenting vote. The move was expected by some market participants, but the statement accompanying the decision did not read particularly hawkish.

According to Commerzbank's Volkmar Baur, the new forecasts revised upward the expected unemployment rate and downward short-term inflation rates. Only medium-term inflation forecasts were revised upward, which may explain why further rate hikes are considered conceivable.

The Australian Dollar (AUD) showed little movement in its initial reaction to the decision, but Commerzbank continues to expect that the RBA's next move will be an interest rate cut, likely keeping the AUD under pressure in the coming months.