The AUDUSD stayed around the mid-0.6400 level after the release of the Reserve Bank of Australia (RBA) dovish minutes. The exchange rate was at 0.6438, showing a slight increase of 0.0003 or 0.05%. The day’s range for AUDUSD was between 0.6437 and 0.6439.
In its September meeting, the Reserve Bank of Australia (RBA) discussed various economic factors and made decisions regarding monetary policy. Here is a summary of the key points discussed:
Inflation and Economic Growth
- Headline inflation in most economies continued to ease in year-ended terms. This trend was attributed to various factors.
- Core inflation, which excludes volatile items, remained more persistent than headline inflation in advanced economies.
- Core services inflation remained high in most advanced economies.
- In Australia, inflation continued to decline but remained at elevated levels.
- Economic growth in advanced economies had slowed due to cost-of-living pressures and tighter monetary policy.
- Growth in household consumption also slowed in the June quarter in many advanced economies.
Labour Market and Wages
- Labour market conditions had eased gradually but remained tight.
- Unemployment rates were still low, indicating a strong job market.
- Wages growth remained solid in the June quarter, reflecting positive trends in the labor market.
- Rent inflation increased, indicating tight rental market conditions.
Property Market and Exchange Rates
- Conditions in the property market in China deteriorated further, posing potential risks.
- Inflation in China remained low compared to global standards and the central bank’s target.
- Housing prices in Australia continued to increase, reflecting ongoing demand.
Monetary Policy Decisions
- The RBA considered two options for monetary policy: raising the cash rate target by a further 25 basis points or keeping it steady.
- Market expectations for the cash rate had declined, with no anticipation of a change at this meeting.
- The decision to hold the cash rate unchanged was based on the observation that interest rates had already been increased significantly, and the effects of tighter monetary policy were yet to be fully realized.
Looking ahead, the RBA expected headline inflation to continue moderating over the second half of 2023. Core inflation, excluding volatile items and holiday travel and accommodation, had also eased further. Despite some easing in labor market conditions, the overall economic growth in Australia was experiencing a period of subdued growth.
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