Australian Dollar Strong, RBA Still "Tightening" Interest Rates
The Australian dollar strengthened to around $0.70 on Monday, continuing its gains from last week. Sentiment was driven by signals from the Reserve Bank of Australia (RBA) that it was in no rush to ease policy, even though the market was beginning to wait for a rate cut.
RBA Governor Michelle Bullock emphasized that interest rates still needed to remain tight to contain inflation, which was not yet completely tame. She made this statement during a meeting with the parliamentary economics committee, while emphasizing that price pressures were still felt across many parts of the economy.
Bullock also highlighted the relatively resilient labor market. For the RBA, this condition is a double-edged sword: the economy appears strong, but it could also make inflation more stubborn and complicate the timing of interest rate cuts.
Nevertheless, the RBA is keeping the door open—not with promises, but with conditions. Bullock emphasized that the RBA board is in no rush to change its restrictive stance, and that its next decision will depend entirely on incoming data, including inflation and labor market conditions.
Recent data suggests that the household economy remains under pressure. Household spending actually fell 0.4% in December 2025, the first monthly decline since March 2024. This signals that the cost of living and high interest rates are still restraining purchasing power, even though the AUD is currently benefiting from the "RBA remains hawkish" narrative. (asd)
Source: Newsmaker.id
