Australia’s GDP for the 4th quarter of 2020 is scheduled for release in a few hours. The market expectation is for the Australian economy to have grown 2.3% (quarter-on-quarter), reflecting a bit of recovery from the 2nd wave of the coronavirus pandemic. However, the previous quarter showed a 3.3% expansion. […]
On this page, you will read about everything you need to know about the Reserve Bank of Australia (RBA) including its latest monetary policy decisions and market-moving speeches.
The Reserve Bank of Australia or the RBA is the central bank of Australia. It succeeded the Commonwealth Bank of Australia which was established 10 years after the country gained independence from the UK. It began managing the local currency in 1924, which was back then known as the Australian pound. Then in 1959, it was tasked as the monetary authority in charge of issuing banknotes in the country.
A Hawkish Central Bank
Given Australia’s export-oriented and commodity-driven economy, its inflation is relatively higher than in other countries. Consequently, managing the rate at which price increases have always been at the top of the RBA’s agenda. The central bank does not always make changes to its deposit rate.
However, remarks on inflation are always enough to spark volatility on the Australian dollar. The RBA has been characterized as a hawkish central bank which means that markets see it as being sensitive to inflationary pressures.
The RBA’s Mandates
When the central bank adopted a freely-floating exchange rate in 1983, ensuring that exchange rates were trading at levels sustainable to growth also become a priority.
Along with the RBA’s list of mandates is also aiming for full employment or the level at which there is a balance between unemployment and inflation.
The central bank is composed of two boards. One, the Payments System Board, ensures that there is financial stability and that payment systems in the country are efficient. Meanwhile, the Reserve Bank Board is the decision-making body that dictates where interest rates should go. The board is made up of nine members, including the Governor.
It is tasked with adjusting money supply in the economy that aligns with the central bank’s mandates. They then announce their monetary policy decisions 11 times per year.
Who Heads the RBA?
Since 2016, the Reserve Bank of Australia has been headed by Philip Lowe.
RBA News and Analysis
A slight pullback on the AUD/USD precedes this month’s employment data. This was caused by USD strength, driven by rising US Treasury yields. Momentum for the AUD/USD could come from the employment data, before China’s economic resumption from the Chinese New Year holidays comes to bear on the market. Scheduled […]
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Vaccine-driven risk flows allowed risky currency assets to gain traction on Monday, with the AUDUSD on course towards 2-month highs at the time of writing ahead of Tuesday’s RBA minutes. Reserve Bank of Australia (RBA) Governor Phillip Lowe, who seems to have formed a habit of dropping market-moving lines just […]
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Risk aversion hit the currency markets just before the onset of the New York session, following a warning from the EU about the dire consequences of the massive second wave of the coronavirus currently sweeping through large parts of the Eurozone. Reports of new lockdowns in France hurt the Euro […]
The minutes of the last meeting of the Reserve Bank of Australia (RBA) further undermined Monday’s attempts at re-establishing upside moves, as expectations of further easing by the RBA grew. These expectations have drawn the AUDUSD closer to the 0.7000 price level; the first time in nearly a month that […]
Last week, the RBA Chairman delivered a sucker punch when he announced that there was room for a 10 bps rate cut. In his words, he said it was “reasonable to expect that further monetary easing would get more traction than was the case earlier”. This is about the strongest […]
The Australian Dollar is today’s worst-performing currency among the FX majors, falling across the board against the US Dollar, Japanese Yen and Euro. What is responsible for this drop despite slightly better than expected employment data? A few minutes before the release of the Australian Employment data, I was able […]
The AUDUSD pair declined slightly as the market reacted to the decision by the Australian central bank. It is trading at 0.7180, which is lower than the intraday high of 0.7210. In its October decision, the bank decided to leave the main interest rate unchanged at 0.25%. That was in […]