Australian dollar slips as RBA hikes rates in a split decision
TLT•The Australian dollar fell after the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85%, with three of nine board members opposing the hike. Markets priced in a 24% chance of another increase, down from 40% before the decision.
1. Split rate decision
The RBA raised its cash rate to 4.85%, its fifth increase this year, in a narrower-than-expected vote: three of nine board members opposed the move. The hike was widely expected after core inflation rose to 3.7% in the third quarter, above the bank’s 2% to 3% target range.
2. Markets pare rate bets
The Australian dollar slipped 0.2% to $0.6986 after falling 0.5% overnight. Markets implied a roughly 24% chance of another increase to 5.10%, down from 40% before the announcement. The RBA raised its inflation forecasts materially and said inflation would stay high for longer, even assuming rates remained around current levels for a year or more.
