Fundamental Comment

RBA holds monetary policy as Aussie resumes rise


The Reserve Bank of Australia’s meeting today saw stability in monetary policy and interest rate at 1.50 percent, amid signs that the Australian dollar is stable but currently low.

The RBA said growth in the global economy was continuing, but US trade policies continued to be a source of uncertainty, while growth in the Chinese economy slowed due to the government's grip on credit risk and narrowing investment opportunities.

Stock markets fell sharply as yields on government bonds rose worldwide, while short-term interest rates in Australia dropped after rising earlier this year.

On the other hand, the bank said the Australian economy has recorded growth above 3.5% in 2018 and is expected to continue in 2019, but it may slow in 2020.

Inflation is continuing to stabilize and is expected to rise in the coming years at a gradual pace, where the rate will reach 2.25 percent in 2019 then rises slightly in 2020.

Overall, the RBA saw that keeping the current monetary policy would move in line with growth and inflation targets, while keeping interest rates at low levels could support the economy, especially as unemployment rates continue to fall.

The Australian dollar rose for the second session in a row against the dollar to set a high of 0.7239 after opening today's trading at 0.7209.

Despite the Aussie’s rally in recent days versus the US dollar, it is still moving below the bearish trend line, which if breached would target 0.7700 levels.

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