The Australian Dollar was significantly declined ahead of the Australia’d Central bank or RBA yesterday. The decision stated that the institution will delay the next tapering.
When this news was released at the beginning of the European session yesterday, the AUD / USD has been recording the decline. It was from 0.74000 to the level of 0.7350.
The Aussie was also weaker than the New Zealand dollar, pound sterling, and some other major currencies. The RBA yesterday delivered the decision to maintain its current monetary policy.
The Australian government bond yields and target yields remain at 0.10 Percent. The central bank will also continue to implement its July meeting decision to reduce the pace of its bond-buying program.
RBA will not Increase the Rate
The reduction is from AUD5 billion to AUD4 billion per week. However, other considerations that accompany these decisions are very dovish. There is another thing to note.
Under july's tapering announcement, the RBA's bond-buying program should expire within the year. However, the RBA yesterday stated that a review of the program would be delayed .
It is especially from November 2021 to February 2022. The central bank is also reluctant to raise interest rates before 2024. The Phillip Lowe as the RBA governor gave a statement.
The representative will not increase the interest rate up to the continued actual inflation is on the target range between 2 up Tp 3 percent. There is a central scenario for it.
Lockdown is the Consideration
The scenario talked here is done for the economy where the requirements will be not filled before 2024. This meant that the RBA abruptly retreated from podium position.
They come to the very back row of the standings in the "rate hike race". More precisely, the institution may only start raising interest rates the decisions taken by the colleagues.
Those are from the Central Bank of New Zealand (RBNZ), the Central Bank of England (BoE), and the U.S. central bank (Federal Reserve) which may execute the rate hike several times.
Worse, the RBA took this decision on consideration of the impact of the Australian lockdown. The lockdown has been in place for several weeks to stem the Delta pandemic, starting in Sydney and extending to other areas.
The Central Bank Prediction about GDP
Lowe said that the central bank expected the Australia's GDP to weaken significantly in the September quarter. After that, the unemployment rate would rise over the next few months.
The New GDP growth will bounce back in the December quarter, then return to pre-Delta levels in the second half of 2022. An economist gave his comment about that situation.
They may confirm their prediction for the short-term Australian dollar weakening. It is because of the temporary negative effect for the pandemic evolution on a growth.
That also close to the Fed reverse. The AUD has a chance to be recovered after the domestic recovery is consolidated. Elsewhere, pound sterling has been slipped for three days in a row.
The Current GBP/USD Position
The current position of GBP / USD (8/September) has approached the level of 1.3763. That was even though it had occupied 1.3864 at the opening earlier in the week period.
Some fear about the UK government's decision to raise taxes where it may depress the household spending which plays an important role as a motor of post-pandemic economic growth.
Yesterday, the Boris Johnson Prime Minister told to the other representatives in the House of commons. He said that tax is needed to handle the health and service crisis for the public.
That is why; the UK government wants to increase the national insurance contribution from the businessmen and workers. The amounts are aroubd 1.25% started from the April 2022.
