RBA’s First Meeting Under Governor Michele Bullock: A Pause In Interest Rates Expected

The Reserve Bank of Australia (RBA) is poised to maintain its key interest rate unchanged for the fourth consecutive time in an upcoming meeting, which will also mark the first under the leadership of Michele Bullock, the new central bank Governor.

While the RBA’s decision to keep interest rates stable is widely expected, financial markets are closely watching to see if Governor Bullock hints at potential tightening later in the year. Leading financial institutions, including ANZ, CBA, Westpac, and NAB, all anticipate that the RBA will keep the Official Cash Rate at its current level of 4.10% following the monetary policy meeting, with the decision set to be announced at 03:30 GMT.

In its September policy statement, the RBA acknowledged that “some further tightening of monetary policy may be required.” Analysts expect Governor Bullock and her colleagues to maintain this language in the upcoming statement, suggesting that more interest rate hikes could be on the horizon.

Despite a rise in Australia’s Consumer Price Index (CPI) inflation to 5.2% in August, up from 4.9% in July, experts believe the central bank will exercise caution and await the full quarterly inflation and labor market report, scheduled for later this month, before making decisions beyond the October meeting.

The RBA will carefully assess the delayed impacts of its monetary policy tightening and the consequences of recent surges in oil prices. Additionally, mounting risks to Australia’s economic outlook are expected to discourage the bank from raising rates in the current meeting.

Analysts predict that the Australian Dollar (AUD) will experience heightened volatility following the RBA policy announcement. Traders will be looking for clues regarding Governor Bullock’s stance on interest rates.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical aspects for trading AUD/USD in response to the policy verdict. The AUD/USD pair currently hovers below the 21-day Simple Moving Average (SMA) at 0.6410, with the 14-day Relative Strength Index (RSI) indicating a downward trend below the 50 level. Immediate support lies at the September low of 0.6331, with further support at the 0.6300 round figure. To initiate a substantial recovery, acceptance above the 0.6450 level is required, targeting the downward-sloping 50-day SMA at 0.6479 and the next resistance at the 0.6500 round level.