The Aussie dollar traded stronger in the Asian session with support from declining US dollar trading and the outcome of the Australian Central Bank (RBA) policy meeting.
The RBA met market expectations by ending its bond -buying program and keeping its interest rate unchanged at 0.10%.
However, RBA Governor Philip Lowe said that the termination is not a sign for an interest rate hike in the near future and policymakers will continue to be patient with current policies.
This indirectly shows that although the RBA is worried about the current rise in inflation, but in reality they are more cautious to start implementing tightening.
Governor Lowe acknowledged that the recent inflation surge was in the central bank’s 2-3% target range, however, it remained much lower than that recorded by developed countries such as the United States and the UK.
He added that inflation and lower wage growth were the main reasons they did not need to move more aggressively like other major central banks.
Even so, policymakers see the possibility that there will be an increase in interest rates by the end of the year.
This raises market expectations that the RBA will tighten. In the Asian session, the Aussie dollar traded higher at around 0.7125 after rising from its lowest level since November 2020.
