The Reserve Bank of Australia (RBA) interest rate decision may rattle the near-term rebound in AUD/USD as the central bank appears to be on course to carry the record-low interest rate into 2018.

With the RBA widely anticipated to keep the official cash rate at 1.50%, more of the same from Governor Philip Lowe & Co. may sap the appeal of the Australian dollar as the central bank remains in no rush to normalize monetary policy. As a result, an attempt to merely buy more time may spark a bearish reaction in the local currency, with AUD/USD at risk of giving back the advance from the summer months should the RBA continue to tame expectations for higher borrowing-costs.

However, AUD/USD may face a more bullish fate if the RBA unexpectedly shifts the monetary policy outlook and shows a greater willingness to implement a rate-hike over the coming months.

Impact that RBA interest rate decision has had on AUD/USD during the previous meeting

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

OCT

2017

10/03/2017 03:30:00 GMT

1.50%

1.50%

-9

+22

October 2017 Reserve Bank of Australia (RBA) Interest Rate Decision

AUD/USD 10-Minute Chart

As expected, the Reserve Bank of Australia (RBA) kept the cash rate at the record-low, with the central bank largely endorsing a wait-and-see approach for monetary policy as officials warn ‘slow growth in real wages and high levels of household debt are likely to constrain growth in household spending.’ The comments suggest Governor Philip Lowe and Co. will carry the record-low interest rate into 2018 as ‘inflation also remains low and is expected to pick up gradually as the economy strengthens.’