February 18, 2025 at 04:16PM
The RBA cut rates by 25 basis points today to 4.10% from 4.35%, after 10 consecutive meetings of unchanged policy and four years since the last rate cut.
IN post-decision comments,RBA Governor Michelle Bowman:
Emphasized that while high interest rates have been effective, the battle against inflation is not yet won. She cautioned against assuming further rate cuts, stating that the market’s expectations are not guaranteed. The recent decision to slightly ease policy was heavily debated, with the rationale being that progress has been made toward the inflation target. However, policy remains restrictive, and further adjustments will depend on continued evidence of declining wage pressures, lower housing costs, and improvements in supply-side conditions.
Bullock acknowledged that the disinflation process could be uneven and that the neutral rate remains uncertain. While now was deemed the right time to unwind some of the previous rate hikes, she stressed that restrictive policy is still necessary to maintain downward pressure on inflation. She also noted that Australia did not raise rates as aggressively as some other countries, meaning there may be less room for cuts.
The RBA is focused on striking a balance, navigating what Bullock called the “narrow path” to sustainably bring inflation back to the 2%–3% target range. While the market appears confident about the trajectory of inflation, she remains more cautious, indicating that future policy moves will be data-dependent, particularly regarding inflation and labor market trends.
The AUDUSD dipped lower following the rate decision but found support near the lower boundary of a key swing area (0.6334 – 0.6363). Throughout the European and U.S. sessions, the pair has largely held within this range, with only minor fluctuations above. The current price stands at 0.6352, making this zone a crucial pivot for traders assessing the next directional move.
A break above 0.6363 with momentum could shift focus toward the 38.2% retracement level at 0.6414 (from the September high to the February low), with the 100-day moving average at 0.6436 acting as a significant resistance point—a level not breached since October 2024.
Conversely, a drop below 0.6334 would put the 100-hour moving average (0.6328) and the 200-hour moving average (0.6303) in sight. Further downside targets include the swing area between 0.6269 and 0.6282. Traders will closely watch these levels for momentum shifts in either direction.
This article was written by Greg Michalowski at www.forexlive.com.
