The Australian dollar dropped today after the Reserve Bank of Australia made a surprise move by cutting its main interest rate. Economists expected that the RBA would hold rates unchanged in the light of the recent positive developments in the global economy.
Australia’s central bank slashed its key interest rate by 25 basis points to 3.25 percent. While some analysts predicted such move, most believed the rate to remain stable. Glenn Stevens, Governor of the RBA, mentioned in the accompanying statement that “the outlook for growth in the world economy has softened over recent months” and “key commodity prices for Australia remain significantly lower than earlier in the year”. At the end, Stevens concluded:
At today’s meeting, the Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative.
AUD/USD went down from 1.0356 to 1.0310 and AUD/JPY dropped from 80.75 to 80.53 as of 10:38 GMT today.
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