Reserve Bank of Australia Governor Bullock spoke earlier:
- RBA Governor Bullock says the Bank is increasingly optimistic about the labour market
Bullock made mention that inflation will remain a crucial
challenge over the next one to two years.
This was very much evident in the minutes to the November meeting released soon after Bullock spoke:
- RBA minutes show intense focus on inflation and inflation expectations risks
Bullock differentiated between supply issues and strong underlying demand:
- “We’re going to see more potential for supply shocks…if
you keep getting them, there comes a point where everyone just
expects inflation to remain high and if inflation expectations
adjust, then it’s a problem”
Said that monetary policy was already restrictive and dampening spending. RBA minutes showed the RBA is concerned about a shift in inflation expectations higher, though, which triggered the rate hike in November.
AUD moved higher on the minutes and has taken fresh impetus from the much stronger mid-rate for CNY:
- Australian dollar jumps after strong reference rate setting for onshore yuan (CNY)
This article was written by Eamonn Sheridan at www.forexlive.com.