As expected, the Reserve Bank of Australia (RBA) kept official interest rates at 4.35% for the sixth consecutive meeting in June.
In its official statement, the Reserve Bank of Australia acknowledged that economic and wage growth had weakened, and that the unemployment rate had risen since its meeting in May.
However, consumption was stronger than expected and labor market conditions also remained “tighter consistent with sustained full employment and inflation at target.”
For now, Governor Bullock and her team remain concerned about inflation continuing to rise above the 2% to 3% target range.
“Inflation is falling but moving more slowly than previously expected and remains high.”
The RBA reiterated that the path of interest rates “remains uncertain” and that the “board is not ruling anything in or out” of their discussions.
Link to the Reserve Bank of Australia's June statement
Bullock revealed in her press that the Council an act They discussed the issue of increasing interest rates but ultimately decided to stay the course while closely monitoring rising upside inflation risks and inflation expectations.
Link to RBA Governor Bullock's press release
Market reactions
Australian dollar against major currencies: 5 minutes
Overlay of the Australian dollar against major currencies Chart by TradingView
The Australian dollar traded in tight ranges as traders waited for the Reserve Bank of Australia event.
Unsurprisingly, talks of inflation continuing to rise in the RBA statement boosted the Aussie as it supported a “higher for longer” interest rate environment if not another rate hike.
The risk-linked currency then received an additional boost early from Bullock's speech when she admitted that the board had discussed a potential rate hike before deciding to keep its policies steady this month.
The 'tightening' event kept the Australian dollar in the green, seeing most gains against the New Zealand dollar, Japanese yen and Canadian dollar while seeing limited gains against the euro, Swiss franc and US dollar.