Aussie Suffers as RBA Lowers Inflation Outlook

  May 10th, 2013 at 11:24, Vladimir Vyun

Banjo Paterson on Australian 10-dollar billThe Australian dollar dropped today, touching the lowest level since June versus its US counterpart, as the Reserve Bank of Australia lowered its inflation outlook, reigniting talks about possible interest rate cut.

The RBA lowered its projections for this year’s inflation down to 2 percent from the previous estimate of 3 percent. Economic growth “is expected to be a bit below trend” at 2.5 percent. The central bank unexpectedly cut interest rates earlier this week and said that it has scope for more cuts. Some analysts believe that the downward revision of the outlook suggests that the bank will indeed use additional stimulating measures, while others think that the forecast is not that bad and does not warrant more easing.

AUD/USD dropped from 1.0089 to 1.0014 as of 11:24 GMT today and its daily low was at 1.0003. EUR/AUD advanced from 1.2920 to 1.2980, the highest settlement since February 12.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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