The Australian dollar continued to fall today, extending its decline for the third straight session, as the Reserve Bank of Australia suggested that an interest rate cut may be possible as the inflation pressure eased.
The RBA kept the main interest rate at 4.75 percent and said in the statement:
Taking into account all the recent information, the path for inflation may now be more consistent with the 2â3 per cent target in 2012 and 2013.
The central bank also added:
An improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary.
The prospect for lower interest rates overshadowed the increase of the trade balance surplus and the growth of the building approvals that was ten times above market expectations (the approval rose 11.4 percent compared to expected 1.1 percent).
AUD/USD fell from 0.9526 to 0.9459 and AUD/JPY dropped from 72.99 to 72.51 as of 8:23 GMT today.
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