The AUDNZD exchange rate has data on Wednesday from the New Zealand and Australian economies.
AUDNZD – Daily Chart
The price of AUDNZD was higher on Tuesday with resistance ahead of the 1.1100 level. A larger resistance comes in at 1.1150.
Reserve Bank of Australia governor Michele Bullock has told the Albanese government that further election spending will force interest rates to remain high for longer. If policymakers ignore the message to be “very conscious” about inflation in their spending decisions, a pre-election interest rate cut by May will not be assured.
Economists unanimously expected the central bank to leave its cash rate at the highest level since November 2011. Headline inflation fell to 2.8% in the September quarter, the lowest level in three-and-a-half-years, which the RBA said was still too high.
Tuesday marked 12 months since the RBA last increased its benchmark rate by 0.25%. In a statement, the central bank said that while prices have “fallen substantially” since it peaked in 2022, underlying inflation at 3.5% in the September quarter needs to be lowered.
The bank has also revised its economic forecasts, which were released on Tuesday, and the bank does not expect inflation to reach the mid-point of its 2-3% target until 2026.
“While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high,” the report said.
Underlying weakness is also present in the New Zealand economy and the central bank warned it could get worse. “Rising unemployment is starting to create acute financial difficulties for some households,” the RBNZ said.
The RBNZ expects to see a contraction in the economy for the third quarter, as it raised the cash rate to bring down inflation. Since August, the central bank has cut the official cash rate by 75 basis points due to lower inflation, but it has not spurred the economy.
RBNZ Governor Adrian Orr told a press conference that the real economy was lagging the interest rate cuts and getting through that lag was a concern.
“You don’t want surprises or shocks to the downside during that period,” Orr said.
