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Aussie dollar jumps immediately after RBA rate decision

Aussie dollar jumps immediately after RBA rate decision

The Australian dollar reacted quickly to the Reserve Bank of Australia's latest decision on the official cash rate.

The Reserve Bank of Australia (RBA) left the official cash rate on hold at 1.5% for another month after its November board meeting.

This decision saw the Australian dollar jump from 76.80 US cents at 2.20pm (Sydney and Melbourne time) to 76.94 US cents just twenty minutes later. It had previously been at 76.94 US cents earlier in the day before dropping in the lead up to the RBA's decision. 

In a statement that was largely unchanged from previous months, RBA Governor Philip Lowe spoke about relatively positive conditions for non-mining businesses and employment growth, as well as a strong Australian dollar.

This decision on rates comes days before the RBA releases its updated forecasts for Australian economic growth, inflation and unemployment in its quarterly Statement on Monetary Policy on Friday 10 November. So far the RBA is positive about current conditions.

“The Australian economy expanded by 0.8% in the June quarter. This outcome and other recent data are consistent with the Bank's expectation that growth in the Australian economy will gradually pick up over the coming year,” Lowe said in one of the few changes to the statement from October.

“The outlook for non-mining business investment has improved, with the forward-looking indicators being more positive than they have been for some time.”

This mood was reflected in recent comments from Craig James, chief economist at CommSec.

“Strong jobs growth and business conditions may have contributed to a more optimistic assessment of the economy over the year ahead,” said James.

“Interest rates are expected to remain at record lows of 1.5% through to the end of 2018, alleviating some concerns around the health of household balance sheets.” 

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. As the information on this page has been prepared without considering your objectives, financial situation or needs, you should, before acting on the information, consider its appropriateness to your circumstances. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Past performance is not an indication of future performance. Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.