The RBA's Decision Was As Expected, But Why Did The AUD Fail To React? - Kakiforex | Forex markets for the smart money. The RBA's Decision Was As Expected, But Why Did The AUD Fail To React? The RBA's Decision Was As Expected, But Why Did The AUD Fail To React?

May 4, 2021

The RBA's Decision Was As Expected, But Why Did The AUD Fail To React?

 As expected, the outcome of the Reserve Bank of Australia (RBA) meeting today ended with interest rates and the 3 -year government bond yield target remaining unchanged at 0.10%.


The RBA continues to reiterate its commitment to remain with accommodative policies for as long as needed to help reduce unemployment and drive inflation higher, signaling interest rates will remain at current levels until at least 2024.


However, in a follow -up statement, Governor Philip Lowe said that policymakers would consider the next bond purchase at the July session policy meeting, following the completion of a second A $ 100 billion quantitative easing program.


Meanwhile, the central bank also raised its outlook on Australia's economic growth. Gross Domestic Product (GDP) is projected to increase by 4.75% in 2021 from 3.5% previously forecast.



Meanwhile, the unemployment rate is seen to decline to around 5% by the end of this year and 4.5% in December 2022. Earlier, the RBA predicted that unemployment would fall by 5.5% by the end of 2022.


The inflation rate is expected to be at 1.5% this year, and increase to 2% by mid -2023.


Even with optimistic expectations from the central bank, however, the Aussie dollar failed to reap the benefits of recording gains. This is because, the central bank also opens up opportunities for further easing if necessary.


In addition, the Aussie dollar was also affected by a return to risky market sentiment due to concerns over the Covid-19 situation in Asia, and the re-strengthening of the greenback dollar.