The Reserve Bank of Australia (RBA) said the Australian dollar had appreciated slightly since its previous meeting, supported by widening yield differentials with other advanced economies.
In its latest minutes, the central bank noted that the real trade-weighted index of the Australian dollar was now close to its estimated equilibrium level, based on its long-run relationship with the terms of trade and real yield differentials.
Policymakers said this suggests the modest rise in the currency is not exerting additional tightening pressure on financial conditions beyond that already created by existing interest rates.
--
The RBA’s comments suggest policymakers are comfortable with the current level of the Australian dollar, viewing its rise as justified by yield spreads rather than excessive strength. The tone implies limited concern over currency-driven tightening ahead of future policy meetings.
---
Earlier:
