The Australian dollar hovered around $0.71, trading sideways near multi-week lows, as a stronger US dollar offset growing expectations of another RBA rate hike. In a podcast interview, RBA Assistant Governor Sarah Hunter confirmed that further rate increases will be needed this year. She reiterated the central bank’s warning that inflation has remained too high for too long, raising the risk that it becomes entrenched in price-setting behavior.
Her comments pushed market-implied odds of a 25-basis-point rate hike at the RBA’s September 29 meeting to 95%. All four major banks now anticipate a move at next week’s meeting, with ANZ also forecasting an additional increase in November. Attention is now turning to remarks from Governor Bullock and a speech by another board member scheduled for later today.
Meanwhile, the US dollar remained firm as hawkish commentary from Federal Reserve officials reinforced expectations of further rate hikes. Last week, the Fed raised interest rates for the first time in three years and signaled additional tightening later this year to rein in inflation.
