RBA Governor Michele Bullock used the new post-meeting press-conference format to explain why the board left the cash rate unchanged at 3.6% after its December policy meeting. She told reporters that rate cuts are off the table, that scenarios requiring rate hikes were discussed, and that future moves will be decided “meeting by meeting.” Bullock stressed that upcoming inflation and jobs data will be key inputs for the February meeting and reiterated that the board stands ready to act if inflation doesn’t slow.
Key Quotes from Governor Bullock
- “Inflation and labour-market data will be important for the February board meeting.”
- “We did not explicitly consider a rate hike at this meeting, but we did discuss tightening scenarios.”
- “We won’t put timing on any future moves—each decision will be meeting-by-meeting.”
- “Rate cuts are not on the horizon.”
- “The outlook now includes an extended pause or possible hikes; we won’t assign probabilities.”
- “If inflation remains persistent, that will be addressed in February.”
- “The board will do what is required to bring inflation back to target.”
RBA Board’s Monetary Policy Statement (unanimous decision)
- Held the Official Cash Rate at 3.6%.
- Noted that risks to inflation have tilted to the upside, although some recent price pressures appear temporary.
- Observed that private demand is recovering and labour markets remain a little tight, but further modest easing of conditions is expected.
- Emphasized data dependency and a cautious approach as the outlook evolves.
- Reaffirmed focus on the dual mandate of price stability and full employment.
AUD/USD Reaction
The Australian dollar initially came under selling pressure when the decision was announced at 03:30 GMT, but it quickly recovered. As of writing, AUD/USD has climbed back to around 0.6625, up 0.06% on the day.
Context Ahead of the Meeting
- Markets were fully priced for a 3.6% hold and focused on the language of the December Monetary Policy Statement (MPS) and Bullock’s 04:30 GMT press conference for clues on the 2026 rate path.
- Q3 GDP grew 2.1% y/y—its strongest pace since mid-2023 and above the RBA’s 2% trend estimate.
- October CPI rose 3.8% y/y, the fastest in 10 months and above forecasts of 3.6%. Wage growth held at 3.4%, matching RBA projections.
- After the CPI print, Bullock warned that if inflation remains persistent, further policy adjustments will be necessary.
- These data have led markets to price in a potential RBA rate hike by late 2026, a sharp reversal from earlier bets on further cuts.
Potential Impact on AUD/USD
- A hawkish pivot in the MPS or Bullock’s comments could fuel additional AUD gains.
- Conversely, a reiteration of a data-dependent, “pause-for-now” stance without any signal of ending the easing cycle could trigger a pullback from near two-month highs.
Technical Outlook (per FXStreet’s Dhwani Mehta)
- AUD/USD is trading near three-week highs around 0.6650, with the 14-day RSI close to—but not yet in—overbought territory.
- On a hawkish surprise, resistance levels to watch are 0.6707 (September 17 high), then 0.6750 and the round figure of 0.6800.
- On the downside, initial support lies at 0.6600. A break below could see 0.6553 (December 3 low) tested, followed by a key support zone near 0.6530—the confluence of the 50- and 100-day SMAs.
