The Australian dollar traded near US$0.7015 in an early Asian snapshot Thursday after Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser said inflation risks had worsened, sharpening the central bank’s policy trade-off.
FXStreet timestamped the quote at 10:31 p.m. EDT Oct. 21 (02:31 UTC Oct. 22) and linked the currency’s weakness to risk aversion and demand for the U.S. dollar. A Reuters market report from earlier that day gave a different picture of the U.S. dollar, tying its decline to investor interest in the yen and government bonds.
At a Sydney conference Oct. 21, Hauser said the inflation outlook was “materially worse” than the RBA had expected in August. He said oil costs had run about one-third above the August forecast, and also flagged technology-related prices, data-center construction and tight domestic capacity as pressures.
The Board’s Sept. 29 decision lifted the cash-rate target by a quarter point to 4.60%, effective Sept. 30. Hauser said monetary policy was working to slow activity, describing household spending as subdued and the labor market as easing. He said policymakers must weigh the need to curb inflation against employment, and noted higher rates add costs for mortgage holders. He did not say whether the Board should raise rates again.
The snapshot follows EconoTimes’ earlier report on the Australian dollar as inflation risks grew.
The latest Australian Bureau of Statistics (ABS) release showed consumer price index (CPI) inflation at 4.0% over the 12 months through August, with trimmed-mean inflation at 3.6%. Both exceeded the RBA’s 2% to 3% target range. The bank’s stated objectives also include sustained full employment, another consideration Hauser said was part of its policy balance.
The ABS is scheduled to release September CPI data Oct. 28. The RBA’s next rate update is scheduled for 2:30 p.m. Sydney time Nov. 3 (03:30 UTC Nov. 3; 10:30 p.m. ET Nov. 2).
