The Australian dollar weakens as RBA’s Bullock signals patience on judging policy

  • We recognized in February that inflation was too high
  • The economy is in quite a good position, policy judgments are difficult
  • Have to be patient in judging policy

There’s been some weakness in the Australian dollar after her comments. It looks like she doesn’t want to overreact to near-term data and take a more patient approach.

As a reminder, the RBA hiked the Cash Rate by 25 bps at the last meeting bringing it back to 3.85%. The data triggered a hawkish reaction with the Australian dollar rallying across the board on higher March rate hike odds (24%).

After Bullock’s comments, traders pared back their bets, with the probabilities of a back-to-back rate hike in March now standing at 13%. The RBA focuses mainly on the quarterly CPI, which is due in April. If the data continues to surprise to the upside, a rate hike in May will be a guarantee

The Australian dollar weakens as RBA’s Bullock signals patience on judging policy

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