The RBA is considering a rate hike. AUD is much more expensive!

Reserve Bank of Australia for the 16th month in a row he kept the interest rate at a record low level of 0,1 percent. It was an action in line with the expectations of the market and investors. Due to the fact that inflation in Australia increased and may accelerate, the bank's council is considering an interest rate hike. Before doing so, he wants to see evidence that the level of price dynamics is permanently in the 2-3% range.

The most important change in the message from the April meeting of the Reserve Bank of Australia (Rebuildables) was to abandon the declaration of patience in maintaining ultra-low interest rates. This, in turn, seems to intensify speculation that the RBA may decide to raise interest rates this summer.

Currency was enough for the announcement. AUD rate up!

This is potentially positive news for the currency market and the Australian currency. AUD / USD exchange rate Today in the morning it seems to rise to 0,7636, the highest level since June 2021. In the last month alone, the Australian dollar seems to have appreciated over its US counterpart by more than 3%, which is probably the best result of the world's major currencies. The appreciation of the AUD may result not only from the current increase in the chances of rate hikes in Australia, but also from the increase in commodity prices.

What Australia might know about high inflation ...

The Australian dollar may grow into one of the stronger currencies in the world against the USD. The country's economy can perform quite well in the current macroeconomic and geopolitical environment. Australia, as one of the world's major exporters of minerals, can earn more as a country, create new investments and jobs. Importantly, inflation does not seem to wreak such significant havoc on citizens' wallets as, for example, in Europe or the USA. It is only 3,5 percent.