FX.co ★ Australian Dollar Holds Near 8-Month High

The Australian dollar remained stable at approximately $0.657 on Friday, maintaining levels near its highest in eight months. This steadiness persists even as widespread speculation suggests the Reserve Bank of Australia (RBA) will proceed with its third interest rate reduction this year at their upcoming monetary policy meeting on July 8. The central bank is forecasted to decrease interest rates by an additional 25 basis points due to diminishing inflation and a softening economic outlook. Inflation registered at 2.4% in the first quarter of 2025, marking its lowest since early 2021 and still within the RBA's target range of 2-3%. Meanwhile, GDP growth decelerated to 0.2% in the first quarter, down from 0.6% in the last quarter of 2024. Originally, economists and market analysts anticipated three rate cuts by the RBA this year. However, by May, they revised their predictions to four, and currently foresee up to five cuts, spurred by quicker-than-expected disinflation and indicators of economic frailty. Despite the increasing predictions of more significant rate reductions, the Australian dollar has appreciated over 6% year-to-date, supported by the widespread weakening of the US dollar.