The Reserve Financial institution of Australia (RBA) saved its money fee unchanged at 4.10% at its April 1st assembly, sustaining its cautiously optimistic stance on inflation whereas expressing considerations about world financial uncertainties, notably associated to US commerce insurance policies.
The choice to carry charges regular was extensively anticipated by markets, with merchants having priced in roughly 93% odds of no change forward of the assembly. This follows the RBA’s first fee lower in over 4 years, which occurred in February 2025 when the financial institution lowered charges from 4.35% to 4.10%.
Key Takeaways:
- RBA maintained money fee at 4.10% as extensively anticipated
- Underlying inflation continues to ease in keeping with forecasts
- Labor market circumstances stay tight regardless of February employment decline
- Board dropped specific reference to being cautious about additional fee cuts
- Rising considerations about U.S. tariff insurance policies impacting world confidence
- Markets worth in 70% likelihood of a fee lower in Could
In its assertion, RBA famous that “underlying inflation is moderating” and has “fallen considerably because the peak in 2022,” however mentioned it nonetheless wants extra confidence that the pattern will proceed earlier than easing once more. The board saved its line that coverage stays “restrictive,” that means it nonetheless sees some downward strain on inflation.
What caught merchants’ consideration was a refined shift, because the RBA dropped an specific reference to being cautious about chopping charges additional, which analysts interpreted as a barely dovish sign. That was sufficient for markets to bump up the chances of one other fee lower in Could to about 70%, with the money fee probably falling to round 3.35% by year-end.
The RBA additionally spent extra time than typical discussing world dangers, notably the U.S. tariffs. “Latest bulletins from america on tariffs are having an impression on confidence globally,” the financial institution mentioned, warning that wider or retaliatory measures might damage world progress and add to inflation uncertainty.
Hyperlink to official RBA Financial Coverage Assertion for March 2025
Through the press convention, RBA Governor Michelle Bullock reiterated that they can not declare victory on inflation simply but, explaining that their choice to ease was not a sign for a sequence of forthcoming reductions. She defined that this lower was a “troublesome choice” and that additional cuts would rely upon incoming information.
Hyperlink to RBA Press Convention for March 2025
Market Response:
Australian Greenback vs. Main Currencies: 5-min
Overlay of AUD vs. Main Currencies Chart by TradingView
The Aussie initially dipped throughout the board after the RBA’s assertion leaned barely dovish, trimming earlier positive factors made in the course of the Asian session as Hong Kong and China markets opened.
However about half-hour later, AUD caught a bid and surged to recent intraday highs after Gov. Bullock pushed again in opposition to fee lower expectations by stressing two-sided inflation dangers.
AUD is seeing the strongest positive factors in opposition to EUR, CAD, and USD whereas seeing extra restricted positive factors in opposition to JPY.
