Prior 4.35%Latest data does not change previous assessment that policy is restrictive and working as anticipatedThe outlook remains highly uncertainInflation is still some way above the midpoint of the 2% to 3% target rangeReturning inflation to target is the priorityUnderlying inflation remains too highPolicy will need to be sufficiently restrictive until confidence returns that inflation is moving sustainably towards the target rangeRBA remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcomeThe most recent projections in the August SMP show that it will be some time yet before inflation is sustainably in the target rangeData since then have reinforced the need to remain vigilant to upside risks to inflationRBA is not ruling anything in or out on next policy stepsFull statement
They added just one passage to the to the guidance communique, that being:
“The most recent projections in the August SMP show that it will be some time yet before inflation is sustainably in the target range.”
In other words, they might just have to keep rates higher for longer as it would seem. The market pricing towards year-end hasn’t changed all too much though. Traders were seeing ~16 bps of rate cuts by year-end previously but are now seeing ~14 bps now.
The overall language is largely kept from August and just continues to place heavy emphasis that the inflation battle is not over yet. And given that, the RBA is not ready to lower the cash rate as such.
AUD/USD nudges up just a little from 0.6848 to 0.6858 currently. The pair is continuing to trade at its highest levels for the year with eyes on the December 2023 high of 0.6871 now.
This article was written by Justin Low at www.forexlive.com.
