Heading into the last RBA meeting, we discussed the potential for some AUDNZD downside on an RBA dovish surprise. However, it is not likely to last. The market was split 50/50 over whether the RBA would hike or not and at the event it paused rates at 4.10%. However, the major focus was always going to be surrounding the forward guidance that the RBA gave and how short-term interest rate markets would react.
The implication of a pause
The RBA has paused rates but crucially has still signalled more rate hikes to come. The key to this meeting was always going to be on the future signalling of rates and not so much on the actual decision. So, looking at short-term interest rate markets we can actually see that rate expectations are virtually unchanged over a longer time frame. The terminal rate is now seen at 4.62% and that is only marginally higher than the 4.54% expected earlier.
The RBA considered that ‘the balance of risks on inflation (had shifted) to the upside compared with a month earlier’. However, they also think that inflation has ‘passed its peak’ and is forecast to return to the target range by mid-2025.
Taking its time
In the latest RBA statement, the board decided to pause on rates partly because inflation was seen as taking longer to return to target than expected. So, the RBA wanted to take a pause and see how the economic data develops in a bid to try and preserve gains in employment. Unemployment is historically low in Australia and the RBA doesn’t want to destroy the labour market unnecessarily. However, at the same time, it also recognised the risks of inflation becoming entrenched in higher wages.
What to watch from here
AUD traders should watch the following two releases very carefully: labour data and inflation data. If it surprises to the upside, especially inflation data, then expect the AUD to potentially gain against the NZD again on higher rate expectations to come from the RBA.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks

Gold price approaches $3,300 mark amid persistent safe-haven demand
Gold price continues scaling new record highs through the Asian session on Wednesday and has now moved well within striking distance of the $3,300 round-figure mark. Persistent worries about the escalating US-China trade war and US recession fears amid the ongoing US tariff chaos continue to boost demand for gold.

EUR/USD holds firm above 1.1350 amid renewed US Dollar weakness
EUR/USD is storngly bid above 1.1350 in European trading on Wednesday. The pair draws support from a fresh round of selling in the US Dollar amid persistent fears over US-China trade war and a lack of progress on EU-US trade talks. US consumer data and Powell speech are in focus.

GBP/USD trades at fresh 2025-high above 1.3250 after UK CPI data
GBP/USD builds on its six-day winning streak and trades at its highest level since October above 1.3250 in the European session on Wednesday. The data from the UK showed that the annual CPI inflation softened to 2.6% in March from 2.8% in February but had little impact on Pound Sterling.

Exchange inflows surge as XRP slides, what comes next?
Ripple corrected along with other major digital assets, including Bitcoin and Ethereum, and traded at $2.08 at the time of writing on Wednesday. The drawdown cut across the crypto market, causing the total capitalization to drop 3.2% to $2.736 trillion.

Is a recession looming?
Wall Street skyrockets after Trump announces tariff delay. But gains remain limited as Trade War with China continues. Recession odds have eased, but investors remain fearful. The worst may not be over, deeper market wounds still possible.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.