RBA hawkish-sounding quarterly Statement on Monetary Policy does little for AUD

The RBA Monetary Policy Statement released by the Reserve bank of Australia is out as follows:

The RBA has revised up its forecasts for core inflation and wages growth and warned further increases in inetrest rates would be needed to head off a damaging wage-price spiral.

Reuters reported that ''in a hawkish-sounding quarterly Statement on Monetary Policy, the Reserve Bank of Australia (RBA) said domestically-sourced cost pressures were still picking even if consumer price inflation was a whole may have finally peaked last quarter.

While growth in global goods prices had cooled this was yet to show clearly in Australia, while inflation in the service sector had climbed faster than expected.''

AUD/USD update

AUD/USD was unchanged in the release as the US dollar stays strong in Asia. However, the pair could be expected to make a move higher into re-test the break of the structure considering the bullish M-formation. The downside target is near 0.6920/10 which guards 0.69 the figure. 

Key notes

"The Board expects that further increases in interest rates will be needed to ensure that the current period of high inflation is only temporary," said the RBA, implying two or more hikes were waiting in the wings.

"The Board's priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people's expectations, it would be very costly to reduce later."

About the RBA statement

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negatvie (or bearish).