The Reserve Bank of Australia signals readiness to hike rates if inflation risks persist, balancing concerns over cost pressures and data center expansion.
AUD/USD held near 0.7150 in Asian trading Tuesday after the RBA’s July meeting minutes revealed a split view on inflation risks. The central bank indicated it remains prepared to raise interest rates if upside pressures materialize, citing oil prices, broad cost pass-throughs, and data center expansion as key drivers.
While some board members warned of rising inflation risks, others highlighted offsetting downside pressures. The RBA concluded it has time to assess incoming data before adjusting policy, emphasizing the need for clear evidence of sustained inflation progress toward its target band.
The USD faced downward pressure following the US Treasury’s decision to double buyback operations for longer-dated bonds, with reports suggesting up to $1 trillion could be tapped from the Treasury General Account. Geopolitical tensions also weighed on sentiment as the US expanded secondary sanctions on entities trading with Iran.