The Reserve Bank of Australia's Monetary Policy Statement is out as follows offering updates in this quarterly release:

Reuters reports that Australia's central bank on Friday warned inflation was heading to three-decade highs requiring further hikes in interest rates that would slow growth sharply, making it tough to keep the economy on an "even keel".

''In its quarterly Statement on Monetary Policy, the Reserve Bank of Australia (RBA) jacked up its forecasts for inflation, downgraded the outlook for growth and foreshadowed an eventual rise in unemployment.

Yet even with further increases in rates, inflation was not expected to return to the top of its 2-3% target range until the end of 2024, pointing to a long period of pain ahead.''

"It is seeking to do this in a way that keeps the economy on an even keel," said RBA Governor Philip Lowe in the introduction to the 66-page statement.

"The path to achieve this balance is a narrow one and subject to considerable uncertainty."

Key notes

  • Ready to do what is necessary to bring inflation back to 2-3% band.
  • Seeking to restrain inflation while keeping economy on an even keel, this is a narrow path.
  • Board expects to take further steps to normalise policy, but not on a pre-set path.
  • Rate rises necessary to create more sustainable balance between demand and supply.
  • Risk that high inflation gets built into wage and price setting behaviour.
  • Inflation broad based but medium, long-term inflation expectations remain anchored.
  • Rising cost of living, higher rates and falling house prices to weigh on economy.
  • RBA downgrades outlook for economic growth, revises inflation forecasts sharply higher.
  • Forecasts based on analyst, market pricing assume rates reach 3% by end 2022, decline a little by end of 2024.
  • CPI inflation seen at 7.75% end 2022, 4.25% end 2023 and 3% end 2024.
  • Trimmed mean inflation seen at 6% end 2022, 3.75% end 2023, 3% end 2024.
  • GDP growth seen at 3.25% end 2022, 1.75% end of 2023, 2024.
  • Unemployment seen at 3.25% end 2022, 3.5% end 2023, 4% end 2024.
  • Wage price index seen at 3.0% end 2022, 3.6% end 2023, 3.9% end 2024.  
  • Around 60% of firms in liaison program expect wages to be high over year ahead.
  • Many employers report they intend to increase headcount further but finding it hard to get workers.
  • Risks to the global outlook are skewed to the downside given synchronised policy tightening.

AUD/USD update

As per the pre-event technical analysis, AUD/USD Price Analysis: Bulls and bears battle it out at critical hourly support, the bulls are moving in at a key hourly level of support:

Update...

About the RBA Monetary Policy Statement

The RBA Monetary Policy Statement is 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).

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD extends slide toward mid-1.0200s after US data

EUR/USD continues to decline toward 1.0250 during the American trading hours on Friday. After the data published by the UOM showed that the long-run inflation outlook rose to 3% in August from 2.9% in July, the dollar gathered strength against its rivals, weighing on the pair.

EUR/USD News

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD pushes lower 1.2100 on broad dollar strength

GBP/USD is trading deep in negative territory near 1.2100 during the American session on Friday. With the UoM's Consumer Sentiment Survey pointing to a modest increase in the long-run inflation outlook, the US Dollar Index extended its rally, reflecting a broad dollar strength.

GBP/USD News

Gold clings to modest gains above $1,790

Gold clings to modest gains above $1,790

Gold stays relatively resilient on Friday and trades modestly higher on the day above $1,790. Although the greenback continues to outperform its rivals on the latest US data, falling US Treasury bond yields help XAU/USD hold in positive territory.

Gold News

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shiba Inu ready to go ballistic: Shiba Eternity released in Vietnam

Shytoshi Kusama, the project leader of Shiba Inu announced the launch of Shiba Eternity for Vietnamese players. The game is available for testing and the team has asked users for their review. 

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures