The minutes of the September policy meeting had a hawkish tone and were controversial, but this sentence seems to indicate that the Bank seriously believes the rate hike cycle is over.
- of Recent data streams are consistent with inflation returning to target within a reasonable period of time, while the cash rate remains at current levels.. Members recognized the value of allowing more time to see the full effects of tight monetary policy from May 2022 onwards, given delays in policy transmission through the economy.
The full text is here:
If the central bank backs away from its hawkish bias too much, the Australian dollar could well come under further downward pressure. A fall in the Australian dollar would affect import prices to rise, which would lead to higher inflation. This is not what the Reserve Bank of Australia wants. However, the bold statement above seems to have let the cat out of the bag regarding the end of the hiking trail. The next key data point will be quarterly inflation data released by the Australian Bureau of Statistics on 25 October. Until that data point is available, the November RBA meeting is best considered a “live” meeting. I will give a better assessment after the inflation data.
AUD/USD updates:
