When is the RBA Interest Rate Decision and how could it affect AUD/USD?


After announcing seven consecutive rate increases, the Reserve Bank of Australia (RBA) is up for another hawkish monetary policy outcome, despite teasing doves of late, during the scheduled Interest Rate Decision around 03:30 AM GMT on Tuesday.

The RBA is expected to slow down on the rate hike trajectory by lifting the benchmark interest rate by 25 basis points (bps) to 3.10%, mainly to fight inflation and match the tune with other major central banks. Given the recently dovish remarks by the RBA officials, the AUD/USD traders will be more interested in hearing about the end of the rate hike trajectory.

Ahead of the event, Westpac said,

The RBA, in responding to a significant inflation challenge and the tightest labor market in 50 years, has quickly raised interest rates. Rates have lifted from a record low of 0.1% at the start of May, with moves at each monthly Board meeting, including 50bps hikes for the four meetings from July to September. The RBA slowed the pace of tightening at the October meeting, back to 25bp increments, with that policy arguably moving into the contractionary zone. Inflation is still too high and more work needs to be done in our view. Annual headline inflation is expected to hit the 8% mark in the December quarter and to still be above the 2–3 target band at the end of 2023 (at about 4%, we expect).

On the same line, FXStreet’s Dhwani Mehta said,

Markets are expecting the RBA to take note of easing inflationary pressures, with all eyes now focused on any changes to this statement - “the Board expects to increase interest rates further over the period ahead.”

How could the RBA decision affect AUD/USD?

AUD/USD picks up bids to renew intraday high around 0.6720 amid the market’s cautious optimism during early Tuesday. The quote’s recent recovery takes clues from headlines suggesting optimism surrounding China’s Covid conditions and recently easy US inflation expectations that challenge the hawkish bias over the Federal Reserve (Fed), especially after Friday’s US jobs report.

As per the latest Aussie data, inflation jumped to a multi-year high, but the economic fears also grew as markets remain divided over the central banks’ next moves. The housing market problem also challenges the RBA hawks and dims the bullish bias surrounding the AUD/USD.

It should be noted that RBA Governor Philip Lowe recently stated that the central bank’s decision to downshift reflects monetary policy lags.

That said, a 0.25% rate hike appears already priced in and may offer a knee-jerk reaction, highlighting the pace of bond purchase and the signal for the RBA’s next rate increase as the key catalysts.

Should the RBA shows readiness to pause the rate hike trajectory from the next meeting, scheduled for February, the AUD/USD may have further upside to trace. However, the need for more rate hikes could challenge the Aussie pair buyers.

Technically, a clear downside break of the five-week-old bullish channel keeps AUD/USD bears hopeful unless the quote rises back beyond 0.6760.

Key quotes

Reserve Bank of Australia Preview: Hinting toward an end to its rate hike cycle?

AUD/USD Forecast: Further declines expected on a break below 0.6685

About the RBA interest rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view of the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD: Recovery gains traction toward 1.0300 ahead of US PPI data

EUR/USD: Recovery gains traction toward 1.0300 ahead of US PPI data

EUR/USD extends its recovery toward 1.0300 in Tuesday's European trading hours. An extended US Dollar pullback from over two-year highs and a positive risk sentiment weigh negatively on the pair. Traders await the US PPI inflation data and Fedspeak for further trading impetus. 

EUR/USD News
GBP/USD rebounds toward 1.2250 amid upbeat mood

GBP/USD rebounds toward 1.2250 amid upbeat mood

GBP/USD builds on the reobund toward 1.2250 in the European session on Tuesday. The Pound Sterling gains ground amid improved market sentiment and a broad-based US Dollar retreat. The next move in the pair will likely be at the mercy of the US PPI data and Fedspeak. 

GBP/USD News
Gold price retains intraday positive bias; lacks follow-through ahead of US PPI

Gold price retains intraday positive bias; lacks follow-through ahead of US PPI

Gold price (XAU/USD) struggles to capitalize on its modest intraday move up and trades around the $2,669-$2,670 area through the first half of the European session on Tuesday, still up over 0.25% for the day. 

Gold News
Monero bulls remain strong, eyes double-digit gains

Monero bulls remain strong, eyes double-digit gains

Monero price trades in green around $204.92 on Tuesday after finding support around its ascending trendline the previous day. The technical outlook suggests a rally ahead as XMR’s MACD indicator shows a bullish divergence, hinting at double-digit gains.

Read more
Bitcoin falls below $92,000 as exchanges show overheating conditions

Bitcoin falls below $92,000 as exchanges show overheating conditions

Bitcoin (BTC) continues its ongoing correction, falling below $92,000 on Monday after declining almost 4% last week. CryptoQuant data shows that BTC is overheating in exchanges and suggests further decline ahead. 

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures