Created
: 2025.01.30
- English
- English
- What's Myforex
- Share
- Use tools
- Get information
- What's New
- Help center
- About us
- Customer support
- Terms and policies
-
-
PortfolioShare your portfolio and performance in real time -
Events & contestsEvents and contests held by retail brokers around the world
-
-
Real-time spread comparisonCompare spreads of major retail brokers in real time -
Volatility analysisVisualize volatility as a measure of daily market activity -
Swap point comparisonCompare buy and sell swap values for each broker by symbol -
Market rates & chartsCheck prices for all instruments offered by each broker -
IndicatorsProviding in-house developed indicators for MT4/MT5 -
Trading calculatorsCalculation tools for each broker to help you trade
-
-
World FX newsLatest news on forex and cryptocurrencies from around the world -
Broker informationTrading information of retail brokers worldwide -
MetaTrader4/5 user guideUser guide collection for the latest MetaTrader4/5 -
Economic calendarRelease calendar for indicators from official sources of major economies
RBA Bulletin studies how changes to interest rates affect economic activity and inflation
World FX news
Breaking news
RBA Bulletin studies how changes to interest rates affect economic activity and inflation
New
2025.01.30 12:48
2025.01.30 12:48
2025.01.30 12:48
The Reserve Bank of Australia published its January 2025 Bulletin, including an in-depth explainer on how:
- Changes to monetary policy affect interest rates in the economy.
- Changes to interest rates affect economic activity and inflation.
Market reaction
At the time of writing, AUD/USD trades better bid near 0.6232, up 0.05% on the day.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA's primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also "..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people." Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets - usually government or corporate bonds - from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
Last updated
: 2025.01.30
Related articles
AUD/USD neutral as US GDP data misses expectations
2025.01.31 01:15USD/JPY falls as US GDP misses estimates bolstering Yen
2025.01.31 00:16Gold challenges record highs post ECB, US GDP
2025.01.31 00:09USD/CAD trades subduedly above 1.4400 despite US Dollar slides after US data
2025.01.30 23:25Lagarde speech: There is no stagflation
2025.01.30 23:24Lagarde speech: Confident that inflation will hit target in 2025
2025.01.30 23:14
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
Was this article helpful?
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Thank you for your feedback.
Thank you for your feedback.
Most viewed
Dow Jones Industrial Average middles on Thursday after mixed data and earnings
The Dow Jones Industrial Average (DJIA) churned on Thursday, marking in tracks around 44,700 but sticking close to the day's opening bids.
New
2025.01.31 02:06AUD/USD neutral as US GDP data misses expectations
The AUD/USD pair stands neutral around 0.6235 on Thursday, struggling to gain traction ahead of the US Q4 GDP data release.
New
2025.01.31 01:15USD/JPY falls as US GDP misses estimates bolstering Yen
The USD/JPY retreats in early trading during the North American session after economic data showed the US economy grew lower than expected a day after the Federal Reserve (Fed) decided to keep rates unchanged.
New
2025.01.31 00:16Gold challenges record highs post ECB, US GDP
XAU/USD trades dangerously close to its record high in the $2,790 region as the latest macroeconomic developments put pressure on the US Dollar (USD).
New
2025.01.31 00:09CTAs will continue to buy Silver - TDS
While a few false dawns have emerged in the past, spot and futures prices are both finally breaking out of the wedge that has contained Silver markets from the 2024's local top not reached since 2012, TDS' Senior Commodity Strategist Daniel Ghali notes.
New
2025.01.31 00:08Gold reaches new all-time highs - TDS
Gold prices are pushing to new all-time highs as we expected, TDS' Senior Commodity Strategist Daniel Ghali notes.
New
2025.01.31 00:04USD/CAD trades subduedly above 1.4400 despite US Dollar slides after US data
The USD/CAD pair trades in a subdued manner above the key support of 1.4400 in Thursday's North American session.
New
2025.01.30 23:25Lagarde speech: There is no stagflation
Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to lower key rates by 25 basis points at the January policy meeting and responds to questions from the press.
New
2025.01.30 23:24Lagarde speech: Confident that inflation will hit target in 2025
Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to lower key rates by 25 basis points at the January policy meeting and responds to questions from the press.
New
2025.01.30 23:14Lagarde speech: Risk of greater friction in global trade could weigh on Euro area growth
Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to lower key rates by 25 basis points at the January policy meeting and responds to questions from the press.
New
2025.01.30 22:59Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy
