Australian Dollar: Oil keeps RBA cautious – BNY

Source Fxstreet

BNY’s Bob Savage notes the Reserve Bank of Australia (RBA) sees elevated risks that inflation expectations drift higher, potentially requiring a deeper slowdown. Oil-driven price pressures and three rate hikes to 4.35% frame the backdrop for AUD/USD.

RBA tightening risk and weak sentiment

"RBA Assistant Governor Sarah Hunter has warned that the risk of inflation expectations drifting higher is “elevated,” which could necessitate a more substantial economic slowdown to bring inflation back to target. The shock to oil prices will exert upward pressure on inflation over the next year, contributing around 0.4 percentage points to underlying inflation in the quarter to March 2027. Underlying inflation is then expected to ease, and headline inflation to fall thanks to lower oil and travel prices."

"The RBA is aiming to keep inflation expectations anchored around the midpoint of its 2-3% inflation band. Rising fuel prices, exacerbated by the Iran conflict, are driving inflation pressures, affecting travel, transport, postal services, groceries and construction costs. The RBA has raised rates three times this year to 4.35% and is monitoring how quickly firms pass higher costs on to consumers, with risks that faster and broader pass-through could drive up inflation expectations."

"The minutes from the latest RBA meeting hinted a pause after three consecutive rate hikes. The bank stated that “while it was still uncertain, financial conditions would probably be somewhat restrictive after this decision” and that this “would give the board space to see how the conflict in the Middle East develops and Australian households and businesses respond.” The RBA’s baseline forecasts assume a 60bp cash rate rise in 2026 and gradual easing of oil prices, with trading partner growth stable due to AI investment."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
New Phishing SMS scam related to the Bybit hack now targets the Binance exchange clientsWeb3 enthusiast and crypto entrepreneur Joe Zhou has flagged a new phishing SMS message scam related to the Binance exchange.
Author  Cryptopolitan
Feb 26, 2025
Web3 enthusiast and crypto entrepreneur Joe Zhou has flagged a new phishing SMS message scam related to the Binance exchange.
placeholder
Metaplanet acquires BTC at record pricesMetaplanet added another 797 BTC to its treasury.
Author  Cryptopolitan
Jul 14, 2025
Metaplanet added another 797 BTC to its treasury.
placeholder
Meme Coins Price Forecast: DOGE, SHIB, PEPE flash sell signals, hint at further lossesMeme coins, such as Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), are experiencing a decline as selling pressure builds in the broader cryptocurrency market.
Author  FXStreet
Aug 19, 2025
Meme coins, such as Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE), are experiencing a decline as selling pressure builds in the broader cryptocurrency market.
placeholder
Bitcoin Traders Split on Whether BTC Will Drop to $70K or Rebound SoonBitcoin market participants hold divided views for short-term price action, with targets ranging vastly between $150,000 and a potential drop back to $70,000.
Author  Mitrade
Dec 22, 2025
Bitcoin market participants hold divided views for short-term price action, with targets ranging vastly between $150,000 and a potential drop back to $70,000.
placeholder
EUR/USD steadies near 1.1650 ahead of US Nonfarm PayrollsEUR/USD holds ground after five days of losses, trading around 1.1650 during the Asian hours on Friday. Traders remain cautious ahead of the US Nonfarm Payrolls (NFP) report, which is expected to offer further insight into labor market conditions and the Federal Reserve’s (Fed) policy outlook.
Author  FXStreet
Jan 09, Fri
EUR/USD holds ground after five days of losses, trading around 1.1650 during the Asian hours on Friday. Traders remain cautious ahead of the US Nonfarm Payrolls (NFP) report, which is expected to offer further insight into labor market conditions and the Federal Reserve’s (Fed) policy outlook.
Related Instrument
goTop
quote