RBA Keeps Interest Rates at 4.35%, Says Interest Rate Path ”Remains Uncertain”

As expected, the Reserve Bank of Australia (RBA) maintained its interest rates at 4.35% in May.

The central bank’s statement noted that

• Inflation to return to the target 2% – 3% range in H2 2025 and to 2.5% in 2026
• Short-term inflation would “decline more slowly over the rest of the year” as high petrol prices and services price inflation would push it up
• The persistence of services inflation is a “key uncertainty”
• Returning inflation to target is unlikely to be smooth
• The Board is “not ruling anything in or out” and the path of interest rates “remains uncertain”

Link to official RBA statement for May 2024

In her presser, RBA Gov. Michele Bullock shared her bias against further rate hikes, saying “I hope that we don’t have to raise interest rates again” but also adding “We don’t think we necessarily have to tighten again, but we can’t rule it out. If we have to, we will.”

Market Reactions

Australian dollar vs. Major Currencies: 5-min

Despite saying that the Board will “remain vigilant to upside risks” to inflation, the statement didn’t contain hawkish enough remarks for a lot of AUD bulls.

This is likely why the Australian dollar reacted negatively to the news. The comdoll, which traded in tight(ish) ranges ahead of the release, lost pips to its major counterparts shortly after the RBA’s announcement and received fresh bearish pressure during Gov. Bullock’s presser.

Looking for your own spot to record your market observations & trading statistics? If so, then check out TRADEZELLA! It’s an easy-to-use journaling tool that can lead to valuable performance & strategy insights! You can easily add your thoughts, charts & track your psychology with each and every trade. Click here to see if it’s right for you!

Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe to a service using our affiliate links, this helps us to maintain and improve our content, a lot of which is free and accessible to everyone–including the School of Pipsology! We appreciate your support and hope that you find our content and services helpful. Thank you!