RBA keeps rates at 4.35% but leaves door open for more tightening as inflation remains elevated, lifting AUD/USD.
The Australian Dollar climbed back above 0.7050 against the USD after the Reserve Bank of Australia paused its tightening cycle but maintained a hawkish stance. The RBA held its benchmark rate at 4.35%, in line with expectations, following three consecutive hikes this year.
Governor Michelle Bullock emphasized that inflation remains too high and further rate increases are possible. She noted that price pressures persist despite a recent US-Iran deal, warning that the RBA may need to act again. The central bank also highlighted risks from El Niño, which could disrupt agriculture and inflation.
The AUD’s gains were limited by a stronger USD, as optimism over the US-Iran agreement faded. Markets are now pricing in potential RBA action in the coming months.