RBA Meeting to Impact Australian Dollar – ING Economists Analyze Potential Effects on AUD

Economists at ING have conducted an analysis on how the upcoming Reserve Bank of Australia (RBA) meeting, scheduled for Tuesday, could influence the Australian Dollar (AUD).

The recent unexpected flattening in January’s Consumer Price Index (CPI) at 3.4% poses potential downside risks to the Australian Dollar, sparking speculation that policymakers might initiate discussions on potential rate cuts. Despite this, there remains skepticism regarding this outcome.

Reasons supporting the maintaining of a hawkish bias by the RBA include the current lower policy rate relative to other major central banks, recent upward adjustments in global rate expectations suggesting a hawkish stance, and persistent concerns regarding a resurgence in inflation.

ING is optimistic about the potential for a sustained rally of the AUD in the second quarter and believes that the RBA is unlikely to intervene significantly in this trajectory.