RBA’s Bullock: We might have to hike rates if inflation takes markedly longer to fall

• But that is not part of our central forecast at the moment
• We have not explicitly said we might hike rates again
• But as per the statement, we are “not ruling anything in or out” for now
• Market pricing still feels rather reasonably balanced at the moment
• But it tells us that we have to be very watchful
• It will be more costly to end up with higher inflation than lower inflation

She’s pretty much reiterating the key takeaways from the policy decision. That being the RBA did not produce an outright hawkish tilt but they are keeping the door open to hike if needed, in the months ahead.

She also says that market pricing on cash rate futures are “reasonably balanced”. I will take that as a nod that traders can be comfortable in continuing to price in rate hikes for now. As such, that should limit much of the aussie downside today – at least on this side of the equation.

This article was written by Justin Low at www.forexlive.com.