AUD/USD remained subdued on Thursday as the Reserve Bank of Australia’s hawkish stance weakened, especially after last week’s stronger-than-expected inflation data. However, the Reserve Bank of Australia acknowledged that recent progress in controlling inflation has stalled and maintained its stance of keeping all options open. The central bank announced it would keep interest rates unchanged at 4.35% on Tuesday.
Australia’s inflation rate increased in March, while market expectations remained stable. In addition, RBA Chairman Michele Bullock emphasized the importance of remaining vigilant against inflation risks. Bullock believes that current interest rate levels can guide inflation back to the 2-3% target range in the second half of 2025 and back to the midpoint in 2026.
The U.S. dollar index, which measures the dollar’s value against six major currencies, rose on expectations that the Federal Reserve will keep interest rates higher for longer. That pushed U.S. Treasury yields higher and supported gains in the dollar.
