The Reserve Bank of Australia (RBA) lifted its Cash Rate for the first time in five months by 25 bps to 4.35%. The initial uptick in AUD/USD faded quickly and the pair dropped to levels just above 0.64. Economists at Danske Bank analyze Aussie’s outlook.
RBA failed to confirm the possibility of another hike
The RBA hiked the Cash Rate by 25 bps to 4.35% after four consecutive holds in previous meetings.
Its forward guidance was somewhat more dovish than earlier, as the statement no longer indicated that ‘further tightening may be required’.
The door for hiking the policy rate is still open, but given the recent tightening in global financial conditions, we think the RBA is likely to remain on hold from here.
We still maintain a downward-sloping forecast profile for the cross in 12M horizon (0.62).
