RBA Stuns Market, Holds Key Interest Rate Steady
**Governor Bullock** addresses the press, explaining the unexpected decision.
The Reserve Bank of Australia (RBA) has surprised markets by holding its key interest rate unchanged at 3.85%. **RBA Governor Michele Bullock** is currently holding a press conference, providing insights into the central bank’s decision during its July policy meeting.
Key Quotes from the Press Conference
**Governor Bullock** addressed questions from the media, highlighting factors influencing the RBA’s decision to maintain the current rate.
Already cut by 50 bps effects still to flow through.
Appropriate to have cautious gradual stance on easing.
This decision was about the CPI timing rather than direction.
There was active debate in board room, difference in two camps was not about direction.
We are on an easing path, question is timing.
Can expect rates to decline if inflation slows as expected.
RBA’s Rationale
The RBA’s decision comes after a period of moderation in inflation. While recent data suggests inflation is broadly in line with forecasts, it was slightly stronger than expected, leading the board to wait for more confirmation. The board voted 6 to 3 in favor of holding rates steady.
According to a recent report, economists are divided on the RBA’s next move, with some predicting further rate cuts later this year, while others expect rates to remain on hold (Reuters).
Initial Market Reaction
The Australian Dollar (AUD) saw an immediate surge following the RBA’s announcement. The AUD/USD pair rose 0.74% to trade at 0.6545.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.27% | -0.21% | -0.07% | -0.26% | -0.72% | -0.39% | -0.27% | |
| EUR | 0.27% | 0.07% | 0.24% | 0.02% | -0.46% | -0.12% | 0.00% | |
| GBP | 0.21% | -0.07% | 0.22% | -0.04% | -0.53% | -0.18% | -0.06% | |
| JPY | 0.07% | -0.24% | -0.22% | -0.20% | -0.67% | -0.29% | -0.11% | |
| CAD | 0.26% | -0.02% | 0.04% | 0.20% | -0.49% | -0.14% | -0.02% | |
| AUD | 0.72% | 0.46% | 0.53% | 0.67% | 0.49% | 0.34% | 0.47% | |
| NZD | 0.39% | 0.12% | 0.18% | 0.29% | 0.14% | -0.34% | 0.12% | |
| CHF | 0.27% | -0.01% | 0.06% | 0.11% | 0.02% | -0.47% | -0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Looking Ahead
The RBA’s monetary policy decisions remain data-dependent, with a focus on inflation and labor market conditions. The board remains cautious, citing uncertainty about aggregate demand and supply.