Australian Dollar Held, RBA Focuses on Preventing Deep-Rooted Inflation
The Australian dollar traded below US$0.695, hovering around a seven-week low as investors remained skeptical of a rapid de-escalation of the Iran conflict. Uncertainty surrounding the conflict and conflicting signals regarding the negotiation path have made risk appetite fragile, limiting room for the AUD to strengthen.
On the policy front, the Reserve Bank of Australia highlighted the rising inflation risks stemming from the global oil shock. The central bank warned that prolonged supply disruptions could push up inflation and long-term inflation expectations, potentially necessitating a more restrictive policy stance. Assistant Governor Chris Kent emphasized that such shocks typically lift prices while depressing growth, shifting the policy focus to preventing inflation from becoming “entrenched.”
Meanwhile, the direction of the conflict remains unclear. Washington has indicated efforts to encourage talks and ease tensions, but Tehran has rejected a ceasefire proposal. Increased US troop deployments in the region have also added to concerns about escalation, keeping the AUD sensitive to oil movements and sudden changes in global risk sentiment.
Source: Newsmaker.id
