RBA Governor Bullock speaks on policy outlook after the expected interest rate hike

Key Points:

• The Reserve Bank of Australia (RBA) raised the Official Cash Rate by 25 basis points to 4.60%, citing persistent domestic inflationary pressures and elevated inflation risks, including impacts from the Middle East conflict and rising energy prices.
• RBA Governor Michele Bullock emphasized that inflationary pressures are expected to last longer than anticipated, with the board prepared to raise rates further if needed, while hoping that the recent rate hikes will be restrictive enough to slow inflation.
• The RBA noted easing labor market conditions but maintained that unemployment remains historically low; they aim to reduce excess demand without causing a recession, and no wage-price spiral has been observed.
• The Australian Dollar showed a slight positive reaction to the rate hike, though market focus remains on upcoming inflation data, which will influence the likelihood of further monetary tightening.
• Technical analysis suggests AUD/USD is at a critical support level near the 200-day moving average, with potential volatility ahead depending on RBA signals and August CPI figures.