Aussie gravitates deeper down. Overview for 07.03.2023

The Australian dollar in pair with the US dollar lost balance and dropped. The current quote is 0.6707.

At the meeting that closed today, the Reserve Bank of Australia lifted the interest rate by just 25 base points to 3.6% per annum. This decision went in line with the forecasts.

This is the tenth increase in the interest rate in a row. By market expectations, the RBA will lift the rate once again in Q2 and then will make a pause in tightening the monetary policy.

The regulator supposes that inflation in Australia has reached its peak. According to the RBA, the monetary policy should remain tight to bring the CPI back to its target values, which is the range between 2 and 3%.

The Australian economy is slowing down, and the RBA has mentioned it several times. Moreover, a drop in consumption of households is noticeable because the monetary conditions are becoming tighter. The employment sector also proves deficient. At the same time, the growth of wages is speeding up, answering the lack of workforce.

The CB is watching the wage-price spiral and still states certain risks in this area.

AUD dropped, reacting to the view of the RBA.