‘CPI inflation is now expected to be around 3½ per cent by the end of 2024 and at the top of the target range of 2 to 3 per cent by the end of 2025. The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe’.
‘Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome’.
The downside bias in the AUD/USD is thought to be mainly on the back of the dovish remarks in the post-statement, exchanging the following sentence from the October statement: ‘Some further tightening of monetary policy may be required’ to ‘Whether further tightening of monetary policy is required’. This indicates that this could be the last hike in this cycle, hence a dovish hike and consequently the bearish response in the AUD/USD.