Australia's interest rate statement was released with a continued contractionary policy approach

AUD RBA Rate Statement

admin 11 December 2022

The Reserve Bank of Australia’s (RBA) monthly interest rate statement contains the outcome of the Bank’s interest rate decision and explains the economic conditions that influenced the decision. It may also provide investors with guidance on the Bank’s future decisions.

A statement with a tighter monetary policy stance would be considered negative/bearish for the AUD, while a statement with a contractionary monetary policy stance would be considered positive/bullish for the AUD at 7:00 p.m. on Tuesday, December 6, the Australian interest rate statement was released.

The Reserve Bank of Australia (RBA) raised its policy rate by 25 basis points to 3.1% and also indicated that a contractionary monetary policy stance was imminent. Thus, expectations that the RBA would signal a halt to interest rate changes were not met. In this respect, this decision was somewhat stricter than expected. However, the statement did not have a major impact on AUD, as the statement also supported the fundamental view in the market and indicated that the RBA will soon stop the process of changing interest rates. The fact that the change of approach is a bit later than expected may lead to strong fluctuations in the foreign exchange market. For this reason, the Australian monetary policy will not support the Australian dollar very much.

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