The Australian dollar declined today after the Reserve Bank of Australia released minutes of its latest monetary policy meeting. The central bank plans to keep interest rates stable for some time, yet at the same time thinks that the currency is too strong and should depreciate to help economic growth.
The Australian central bank was optimistic about the economic developments:
Domestically, timely indicators were consistent with some improvement in economic conditions over recent months, and there were further signs that the expansionary setting of monetary policy was having the desired effects.
As a result, the RBA said about the planned course for interest rates:
If the economy was to evolve broadly as expected, then the most prudent course was likely to be a period of stability in interest rates.
Regarding the Aussie’s strength, the central bank commented:
The decline in the exchange rate seen to date would assist in achieving balanced growth in the economy, though members noted that the exchange rate remained high by historical standards.
The Australian currency slipped on the comments and also on the news that Macquarie Group forecasts a rate cut from the RBA sooner than was previously expected. The news followed the report that Westpac Banking Corp. does not expect lower borrowing costs anymore.
AUD/USD slipped from 0.9085 to 0.9079 and AUD/JPY declined from 92.45 to 92.05 as of 9:59 GMT today. EUR/AUD was flat at 1.5319.
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