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With several big central banks around the world raising interest rates to tackle rising inflation, the Reserve Bank of Australia (RBA) is set to announce its own interest rate decision on Tuesday, October 4, 2022.
What has the RBA done so far to combat inflation and what’s expected from the bank this week?
The annual inflation rate in Australia increased to 6.1% in the second quarter of 2022, up from 5.1% in the previous quarter.
In a bid to combat surging inflation, the RBA raised the cash rate by 50bps to 2.35% at its September meeting, which was preceded by a 50 bps increase during each of the previous three months and another 25 bps hike in May. The recent hike brought the rate to its highest since January 2015.
The bank’s board said that it was looking to bring inflation down to the 2%-3% range and was likely to undertake further rate increases over the coming months. The country’s central bank, meanwhile, is expected to increase interest rates to 2.60% at its next meeting.
What other economic reports are due this week?
The Manufacturing PMI will be released on Monday, with the S&P Global Flash Manufacturing PMI expected to have risen slightly to 53.9 in September from a final level of 53.8 in August. Data on private house approvals and building permits will be released on Tuesday. The S&P Global Services PMI is due on Wednesday and is estimated to have increased to 50.4 in September versus a final level of 50.2 in August.
Other reports scheduled for release this week include retail sales, balance of trade and the construction index.
AUD/USD Prospects
The Australian dollar, which has traded close to a 28-month low versus the greenback recently, is expected to receive some support if the RBA rate hike is higher than expected.
Are you ready to make the most of forex trading opportunities this week, before and after the RBA’s interest-rate decision and economic releases?
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