The Governing Board of Directors of the Reserve Bank of Australia is scheduled to meet this Tuesday to deliberate on its current monetary policy.
The consensus forecasts project that the interest rate in the country would most likely be maintained unchanged at its current level of 0.75 per cent, which was implemented on the second of October.
As regards unemployment, the local labour market has recently experienced a mild deterioration. The unemployment rate rose to 5.3% in October from the recorded 5.2% in September.
Even though the labour market is now getting further away from the RBA's goal of full employment, the conditions do not yet necessitate a more accommodative policy.
As regards inflation, the price stability in Australia has improved over the previous period. Seasonally adjusted inflation has risen to 1.7% in October, which gets closer to, but still below, RBA's 2% symmetric target range.
Australia Inflation Rate. Image source: TradingEconomics.com
Nevertheless, inflation is performing reasonably well, and a change in the monetary policy at the current rate is likely to impede this improvement.
As regards business confidence, the NAB Business Confidence Index has shot up with two index points in October. This sizable increase indicates that both investors and business owners expect the economic conditions in the country to improve over Q4.
Overall, the RBA is most likely to maintain the interest rate unchanged at its current level of 0.75%.
As a result of that, the AUD is expected to depreciate against the other majors momentarily; however, then it would quickly regain its positive outlook. Our long-term expectations on the AUD remains predominantly bullish.
EURAUD 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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