RBA’s Bullock: We are prepared to respond in either direction depending on the data

• We are not thinking of what size we might eventually cut rates by
• Will only discuss how big those moves will be when the time comes
• If our rates are steady while others cut, it supports the Australian dollar
• Not discussed possibility of government overruling RBA on policy decisions
• Even if headline inflation returns to 2% figure, it does not mean inflation is under control
• “Sustainably” means inflation coming back down and staying within target band consistently
• We are not encouraging or discouraging anything with the exchange rate
• Focus should be on the trade-weighted index of the aussie, rather than AUD/USD

That concludes her press conference. Her last point on the exchange rate is definitely a fair one as AUD/USD is also largely driven by policy divergence between the RBA and Fed currently.

Looking at the trade-weighed index of the aussie via Bloomberg, it is only trading back up to levels seen in late August. It is currently seen at 62.40 and a far cry from the July high of around 64.50.

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