AUD Falls as RBA in No Rush to Hike Interest Rates

Tightening the economy appears to be a globally popular trend. This comes to light as markets everywhere struggle to control the rising inflation in their respective countries. The Reserve Bank of Australia, however, is not in any rush to make a rash decision.

Calling it risky and too early, the Reserve Bank of Australia has delayed the measure to hike interest rates as of now.

Central Bank Taking It Easy With Interest Rate Hike

Brokers trading Australian Dollars have kept their eyes on the board. The value last touched the lowest point of $0.6967, only to bounce to the peak of $0.7248. It has currently come down to $0.7147.

Its lowest point could have a pass to get on board for trading. Gains are clearly evident but still carry risk amid the rising inflation rate. Click here to read about different Australian Forex brokers and how you can deal with the currency.

Every move that global markets make is not going to have any impact on how the Reserve Bank of Australia plans to run the financials of the country.

The board of the Central Bank has made it clear that it has no plan to rush into hiking the interest rates at the moment.

Philip Lowe, the Governor of the Reserve Bank of Australia, has justified this move by saying that it was too risky to tighten the economy so early. He has given a hint that the move will occur as it could be completely ignored.

The Central Bank is likely to make a move in August if the country’s economy performs as per its expectations.

The statement issued by Philip Lowe has come out as Dovish in nature for traders who have placed their wager in the US Federal Reserve and the Reserve Bank of Australia taking an early call of action.

Futures are settling the price with a hike of 1.25% by the end of the year, with the first hike of 0.25% expected to come in the month of June.

Belinda Allen, a Senior Economist at CBA, has clarified that the board was prepared to be more patient than those countries which have higher inflation. She signaled that inflation could be expected to rise in the future, but it will be supported by the growth in wages to the workers.

A surge in US Treasury yields has, meanwhile, affected bonds across the globe. Australia’s 10-year paper has fetched yield at 2.19%, which is up by 22 basis points. The figure is being compared by experts to the last peak that was seen in the early days of 2019.

New Zealand has also not remained unaffected due to US Treasury yields. Its 10-year paper has highlighted the yield of 2.815%, up by 21 basis points.

A similar effect can be seen in New Zealand’s currency which has touched the mark of $0.6651 without being able to sustain the overnight high of $0.6733.