Australian Dollar Gains on RBA Minutes

Market Trends - 17/05/2016

The Australian dollar, which has been in a steady decline since late April got a reprieve today as the RBA meeting minutes from early May showed details behind the decision to cut rates by 25bps and lowering Australian interest rates to 1.75% - a historic low by RBA standards. The Aussie dollar was the third top performing currency in the first quarter of the year, but the tables turned after first quarter inflation data showed a weakening trend. This eventually led the RBA to cut the interest rates, a decision that saw economists equally divided.

Today's RBA minutes revealed that the decision to lower interest rates for the first time in a year required the "persuasion" of its board members, with some considering a delay on the rate cut. Most members felt that inflation would return to the 2–3.00% target. In a nutshell, today's RBA minutes reveal that further rate cuts are unlikely, which should see the AUD retrace its losses over the course.


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