News – AU – RBA minutes: Don’t fight AUD strength

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The latest RBA minutes show that the central bank may have to accept that the AUD should get stronger The recent minutes show that the RBA expects to have “very significant” financial assistance for some time The RBA has also revealed why it has extended its bond purchase program, saying if the central bank had allowed the QE to end in April, the AUD would have risen

Well, the AUD went up anyway. There are a long line of central banks who have had to accept that it is very difficult to fight market forces. The SNB and the RBNZ have recognized in recent history that currency wars only lasted so long In the end, it’s probably better not even to try it. Think about the EURCHF 12,000 bond and how that affected the world, for example. The PBOC wisely stepped back from all rumors last year It reminds me of the clash song I fought the law and the law won 😉

The RBA has to do a balancing act The RBA cannot afford to be one step ahead of other central banks as it skyrockets the AUD, which will then hurt both exports and the labor market, so expect that it continues with the mantra that no interest rates will rise until 2024 and that they break the global party line of “no tapering!” The RBA will continue to try to stay behind the big central banks as a smaller player

In the meantime, it means the reflation narrative of buying the AUDJPY dip remains the base case

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Reserve Bank of Australia, central bank, Australian dollar, monetary policy

News – AU – RBA Minutes: Don’t Fight AUD strength

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