The Reserve Bank of Australia (RBA) at a meeting on Tuesday, March 2, decided to leave the official cash rate (OCR) unchanged at a historic low of 0.10%. In its accompanying statement, the RBA explained that it will not lift rates for quite a long time, i.e. the next 2-3 years, until inflation in the country levels out in the target range of 2-3%.
According to the RBA, the stability of inflation in the case of Australia directly depends on the balance of power in the employment sector, which means it will be necessary to make efforts to create new jobs and increase business competition for labor so that wages start to grow faster than at present.
This has long been no secret to the RBA and investors, but today’s reference to an extensive period of soft monetary policy has played out against the aussie. Additional pressure came from market-wide risk aversion seen during Tuesday’s trading session.
Today AUDUSD has been in retreat, hovering around 0.7744, but the pair could retrace to the 0.7703-0.7720 range by the close.