The Australian dollar remained below $0.71, hovering at a four-week low, as the US dollar strengthened in the wake of the Federal Reserve’s first interest rate hike since 2023. The move overshadowed expectations of further tightening by the Reserve Bank of Australia (RBA).
The Fed unanimously raised the federal funds rate by 25 basis points to 3.75%–4.00%, in line with forecasts, citing persistently elevated inflation. Updated projections showed that 16 of 18 policymakers anticipate at least one additional increase this year.
Attention now turns to the RBA’s policy meeting on September 29. Markets are assigning an 85% probability to a 25-basis-point hike from the current 4.35% cash rate, with expectations that the rate will rise to around 4.85% by early 2027. The IMF has also warned that stubborn inflation and higher energy costs pose upside risks to prices and could force the RBA to tighten policy further.
At the same time, traders are closely tracking developments in the Iran–US conflict and their implications for oil markets. Crude prices remain above $100 per barrel, though they have begun to ease as Saudi Arabia moves to restore pipeline capacity.
