When is the RBA rate decision and how could it affect AUD/USD?

Omkar Godbole FXStreet Contributor

RBA Overview

The Reserve Bank of Australia (RBA) will announce the latest monetary policy decision at 04:30 GMT on Tuesday. The central bank is forecasted to keep interest rates unchanged at a record low of 0.25% and maintain its yield curve control policy (YCC).

Status quo decision likely

"RBA commentary over the past month makes it clear the Board is content with current monetary policy settings. As such, we expect no changes at this week's meeting," TD Securities' analysts said in a research note.

Meanwhile, analysts at Standard Chartered noted that "the RBA's YCC has worked well in anchoring 3Y interest rates; it restarted bond purchases in August, to provide further monetary easing after the re-imposition of lockdowns in Melbourne. We believe the hurdle for further rate cuts or modification of YCC is high; the success of its YCC measures would enable the RBA to stay on the sidelines in the near-term."

And while the central bank is likely to indicate that the coronavirus-induced slowdown has not been as bad as initially feared, it is expected to state that the recovery would be uneven and bumpy.

The focus would be on the central bank's take on the damage caused by the lockdown in Victoria and the exchange rate.

A status quo policy will likely have a negligible impact on the Aussie dollar pairs. That said, the RBA may try to talk down the Aussie dollar, as the AUD/USD pair has risen by nearly 1,400 pips in the past 5-1/2 months. The currency pair could rise further on the Federal Reserve's recent decision to adopt a more relaxed approach to controlling inflation.

About the RBA rate decision

RBA Interest Rate Decision is announced by the Reserve Bank of Australia. If the RBA is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the AUD. Likewise, if the RBA has a dovish view on the Australian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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