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I confirm my intention to proceed and enter this websiteThe Reserve Bank of Australia (RBA) has cut the cash rate by 25 basis points to 4.1%, marking its first rate cut since November 2020. While this move was widely anticipated, the RBA’s statement carries a “hawkish” tone, suggesting that future rate cuts will be gradual and measured.
In its monetary policy statement, the RBA acknowledged that inflation and GDP growth have been weaker than expected. The labor market remains strong, although recent data suggest there may be more spare capacity in certain sectors than initially thought.
The RBA has revised its inflation and unemployment forecasts, lowered its inflation projection and predicted a reduction in household spending.
Latest RBA Forecasted Consumer Price Index (CPI):
In their statement, the RBA noted that domestic financial conditions remain restrictive, with interest rates still above neutral levels. While inflation is moving toward the target range, the RBA remains cautious and warned against premature policy easing, which could push inflation above the desired 2-3% range.
The decision to cut marks the beginning of its easing cycle, but the central bank’s tone remains cautious. The RBA will continue to take a data-driven approach to ensure inflation returns sustainably to its target range.
In her statement, RBA’s Michele Bullock emphasized that the rate cut “does not imply further cuts are coming”. The board remains cautious about the prospects for further easing, suggesting that we may not see another cut until after the release of the Q1 2025 Consumer Price Index in June.
The AUDUSD has seen some minor choppy movement following the latest rate decision, but the broader trend remains largely unaffected.
(AUD/USD 4-Hour Chart, Source: Trading View)
From a technical perspective, the strong pullback from its near 5-year low since the pandemic crash suggests that bulls have found support, especially with the weakening dollar.
The breakout above the resistance zone near 0.6300 – 0.6320 indicates that a bullish reversal for AUDUSD may be imminent, with 0.6370 potentially acting as short-term resistance for the bulls. Despite the hawkish rate cut from the RBA, it seems unlikely that any factor will weigh down the AUDUSD, reinforcing a bullish outlook moving forward.
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