Australian Dollar Climbs In Morning Trade as RBA Rate Cut Bets Fade
- AUDUSD climbs more than 0.3% as RBA releases statement
- Australian government bond yields climb alongside Aussie gains
- RBA said previous rate cuts are working their way through the economy
The Australian Dollar climbed more than 0.3 percent versus its US counterpart after the Reserve Bank of Australia released its quarterly statement on monetary policy. In its statement, the central bank downgraded the 2016 GDP forecast to 2% - 3% from 2.5% - 3.5%. The bank’s outlook on inflation was revised higher to 2.5% over the next 2 years; it also sees inflation being contained and consistent with its target. The RBA said that unemployment is slightly lower than originally expected while at the same time, being steady over the next 18 months and possibly coming down slightly. The central bank also said the February and May rate cuts are working their way through the economy.
While RBA’s monetary policy stance remains accommodative and based on incoming economic data, the tone which the central bank gave off seemed less dovish. In particular, the central bank noted that this year’s easing is currently working to settle into the economy. Indeed Australian government bond yields, such as front-end and 10-year, climbed after the statement was released. This suggests that markets are becoming less certain of more easing from the RBA in the near-term.
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