The Reserve Bank of Australia (RBA) interest rate decision is set to be made public via a media release on Tuesday, at 2.30 pm (Sydney time). In less than 18 hours, forex traders will get a glimpse of the current Aussie economic situation and whether there is going to be a rate cut, hold or rise decision. Given the stagnant Australian economic factors and lack of changes since the last Reverse Bank Board meeting, the majority of experts predict there will be no interest rates changes in September.
Resident rate experts predict the rate to hold at 1.50%
With the inflation rate still below the 2-3% target rate and unemployment rate still awaited to fall – resident rate experts couldn’t help but predict the rate will hold at 1.50% in September, as well. “The RBA will hold interest rates at 1.50% at their next meeting, continuing a run of stability that now dates back over 2 years.
Consumer confidence has been hit by the recent political chaos in Canberra, and job growth in the economy will likely slow down in the lead up to the next election, but the RBA is still reticent to cut, despite numerous headwinds the economy is facing”, says Jordan Eliseo, the Chief Economist at ABC Bullion.
The Aussie cash rate target has been 1.50% ever since 3rd August 2016 and forecasts indicate nothing’s going to change until the latter half of 2019. The next move is likely to be an increase, but for now, the current economy does not as yet justify higher money policy rates.
While some resident rate experts, like Matthew Peter from QIC, think the market is not pricing a rate hike until 2020, others are already starting to see some improvements: “We have had a positive effect regarding unemployment, now under 6% together with a strong outlook in the job sector, both with full time and part time positions. I feel this needs to stay on an upward trend of let least 1 more quarter before the Reserve Bank increases rates”, says Christine Williams, an Australian investment property strategist.
How the RBA Interest rate will affect the AUD/USD?
Unfortunately for forex traders, the outlook for AUD/USD remains titled to the downside, as the RBA is expected to introduce no change to its monetary policy. At the moment, the average sell price is 0.7267, the buy price is 0.7274; while the trend index is bullish and the OB/OS index remains neutral.