The Reserve Bank of Australia’s (RBA) Board is going to announce the next official cash rate target on Tuesday, 04:30 GMT (Sydney). The meeting is expected to follow the course of the last one, during which no interest rate changes have been made, the cash rate remaining on hold. In spite of the matching predictions of numerous experts, forex traders from all around the world are still anxious to see if central bankers took new decisions regarding the AUD cash rate target.
It can be very hard to predict the movement of the cash rate as it is based on a multitude of factors that are continually changing, but Australia has been making it a lot easier for experts lately. The RBA is about to set the official cash rate on Tuesday; however, all surveys, news and reputable websites, including Market Index – already predict and vouch for the fact that the cash rate will hold.
The interest rates reached a new low record of 1.5% last month and nothing seems to have changed since then. The inflation rate is still low and below the target, the unemployment is high and the economic fundamentals remain largely unchanged, creating an impossible environment for a cash rate target change.
The cash rate target is basically the current interest rate (monetary policy decision). The RBA is Australia’s central bank; therefore, it is in charge of setting the monetary policy that will keep inflation low and stable. The Board of the Bank sets the official cash rate every Tuesday, each month, excluding January.
Because there are so many factors that could affect the cash rate target from month to month; each RBA Rate statement is equally important and essential to the forex traders, as the major currency pair AUD/USD and any other currency pair that has the AUD on one side will be stimulated by the outcome of these monthly meetings. In case there are any changes in the cash rate target, they will take effect the following day; meaning that traders should act fast in case they have on-going trades that include the AUD.