Markets have largely priced in a 25-basis-point Reserve Bank of Australia increase to 4.85% at the 3 November meeting, following faster CPI inflation. Earlier tightening is described as cooling the labour market, while weak productivity growth is said to be sustaining inflationary pressure even as consumption growth stays subdued. The risk flagged is that the RBA either pauses, in line with the Reserve Bank of New Zealand’s recent move, or delivers a hike while signalling that rates are close to their peak.
Monetary Policy Outlook and Economic Projections
Attention is also on the accompanying Statement on Monetary Policy, which is expected to revise down 2027 GDP growth forecasts and lift inflation projections, reflecting a policy trade-off.
AUD/USD Movement and Key Levels
AUD/USD has recovered from 0.6894 to 0.7032 in the second half of October, but the move is characterised as tentative, with direction also tied to the USD and whether the pair can clear last week’s 0.7068 high.
