The Australian dollar, paired with the US dollar, is weakening as part of a correction. The current AUDUSD exchange rate stands at 0.6585.
During today’s meeting, the Reserve Bank of Australia decided to keep the interest rate unchanged at 4.35% per annum, in line with the market consensus forecast. In its comments, the RBA noted that further decisions on tightening will depend on incoming data.
The central bank may refrain from tightening as inflation in Australia is slowing down, with the CPI indicator for October dropping to 4.9% y/y, down from 5.6% earlier.
Australia’s interest rate is at its 12-year high.
It is worth noting that the Reserve Bank of Australia is typically highly flexible in changing the interest rate trajectory. If there are reasons for reducing the cost of borrowing, the central bank will do so rapidly.