AUD/USD to Fall as Rates Drop

  on November 20 2012 2:35 PM

Australia’s central bank is weighing further interest rate cuts, though higher-than-expected inflation and improvements in the global economy underpinned its decision to keep rates steady earlier this month.

“Further easing may be appropriate in the period ahead,” the Reserve Bank of Australia, or RBA, said in the minutes of its 6 November board meeting, published Tuesday.

The central bank earlier this month kept its benchmark lending rate steady at 3.25% after Australian consumer prices rose more strongly than expected in the third quarter and as “more positive” news emerged from the US and China, the resource-rich nation’s biggest trading partner.

The decision surprised most economists. Financial markets are currently pricing in around a 60% chance of another quarter of a percentage point cut in December.

The RBA has lowered its cash rate target by 1.5% over the last year as a mining investment boom that has powered growth in recent years has lost steam on sharp falls in the price of industrial commodities.

In Tuesday’s minutes, the central bank said the effects of earlier interest rate cuts were “continuing to work their way through the economy”.

 


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Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.

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