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Australian dollar slips after RBA governor flags tougher inflation outlook
The AUD was quoted around 0.6965 per US dollar, after Michele Bullock warned the economy could slow while housing cools faster than expected.
The Australian dollar weakened against major currencies after remarks from Reserve Bank of Australia Governor Michele Bullock raised concerns about stagflation risk, FXStreet reported. During European trading on Tuesday, the AUD was down 0.35%, trading at roughly 0.6965 against the US dollar.
FXStreet said Bullock cautioned that “economy slowing” and “housing market cooling” could be more pronounced than anticipated, while the RBA kept the option of cash rate hikes on the table to bring inflation down.
The report added that Bullock did not provide guidance for the next policy meeting, but noted the board could face difficult decisions if inflation does not fall. Investors are now looking ahead to Australia’s Q2 and June consumer price index data expected to rise 4.1% and 4.0% year over year, respectively, on Wednesday.
On the US side, markets are awaiting the Federal Reserve’s Wednesday policy announcement, where rates are expected to remain in the 3.5% to 3.75% range. FXStreet also noted expectations that Fed Chair Kevin Warsh will not add to the outlook, pointing to his June comment that forward guidance is not well suited in the current policy situation.