The rate decision today runs against market pricing going into the meeting. However, it needs to be put into context. Essentially, what the RBA is saying here is that they want to wait on the next quarterly CPI report on 30 July before making a more informed decision to cut the cash rate in August. That is what I would gather from the decision and statement language today.
AUD/USD hourly chart
The aussie has jumped higher on the immediate aftermath but buyers might not want to get too carried away with gains here. From a technical perspective, AUD/USD is also running up against the confluence of its key hourly moving averages near 0.6550. So, there’s that.
But also, the RBA decision today doesn’t necessarily mean a pause for longer stance adopted by the central bank. I would argue that they’re just playing it on the safe side more than anything else.
The statement language is broadly unchanged from May and the RBA specifically points out that it wants to wait for “more information”. And that likely alludes to the next quarterly CPI report on 30 July.
Coming into the meeting, markets were pricing in ~74 bps of rate cuts by year-end. And that is still possible with four more meetings to go. A rate cut delayed does not mean a rate cut taken away. That’s an important thing to consider when chasing any further aussie gains from the decision here.
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