After Australia's central bank raised interest rates, TD Securities strategist Prashant Newnaha expects the Australian dollar to lag into year-end as policymakers hold off on further increases, FXStreet reported.
The Reserve Bank of Australia (RBA) raised its cash rate target by 25 basis points to 4.85% from 4.60% on Nov. 3. Six board members supported the increase and three preferred to leave the target unchanged. The new target takes effect Nov. 4; RBA rate history shows it is the highest since 2008. The Australian dollar fell after the decision, as EconoTimes reported in its earlier coverage.
The cash rate target influences other interest rates, including mortgage and deposit rates, the RBA says. The bank expects higher rates and weaker housing conditions to weigh on household consumption and dwelling investment, connecting its policy decision to household borrowing and saving costs.
The RBA raised its inflation outlook, citing higher energy prices linked to the Middle East conflict and greater domestic capacity pressures. It forecasts year-ended consumer price inflation of 4.5% in the December 2026 quarter and 2.7% in the December 2027 quarter. The forecasts were finalized Oct. 28.
In FXStreet's account, Newnaha's central forecast has no further rate increases and puts November 2027 as the earliest point for a cut. The outlet said he expects the Australian dollar to underperform through the rest of 2026. His view is a private-sector forecast, not an RBA policy commitment.
The RBA has not promised to hold rates steady. It said policy could shift as its view of the outlook changes, and the board said it would do what it considers necessary to bring inflation sustainably back to target. Westpac Chief Economist Luci Ellis also expects no rate change in December but said inflation risks remain tilted upward.
The RBA is scheduled to publish minutes of its November meeting on Nov. 17 and make its next rate announcement on Dec. 8.
