RBA Pause May Extend into Second Half of 2025, Weighing on Australian Dollar

The Reserve Bank of Australia (RBA) has kept its cash rate steady at 4.35% since November 2023, and this pause may extend into the second half of 2025.

According to Brown Brothers Harriman (BBH), a prolonged RBA pause could weigh on the Australian Dollar relative to other major currencies.

The AUD has already been sensitive to shifts in interest rate differentials, and if the RBA lags behind other central banks like the Federal Reserve and the European Central Bank in beginning a rate-cutting cycle, it may underperform against currencies where central banks are moving toward more accommodative policy.