Australia's potential for higher prices likely limited

The Reserve Bank of Australia did not lower its interest rates further this morning. All 27 analysts polled by Bloomberg had expected that.

The recently weak aussie was the main reason for its decision. In its statement the RBA pointed out that it considers the recent aussie weakness to have been necessary and expects further depreciation. For some time now it has been referring to the fall in commodity prices in this context. The FX market considered today's meeting as a complete non-event. AUD-USD continues to trade just below 0.75. The potential for higher prices is likely to be very limited at present.