Aud interest rate cut

WHAT IS INTEREST RATE?

An interest rate is an amount charged and expressed as a percentage of the principal by a lender to a borrower for the use of assets. These interest rates are typically noted on an annual basis which is referred to as the annual percentage rate (APR). The various categories of assets which can be borrowed include consumer goods, large assets such as buildings or vehicles and cash. An interest is essentially a leasing or rental charged to by the lender to the borrower for the assets in use. Borrowers are usually charged a low-interest rate if the borrower is considered as a low-risk and vice versa. The interest rate plays a vital role in determining how much a borrower pays back as interest. The low-level interest rates of the AUD are continuing to support the Australian economy. 

Usually, the AUD interest rate decision also known as the RBA Interest Rate Decision is announced by the Reserve Bank of Australia. When the RBA appears hawkish about the inflationary outlook of the economy and rises, the interest rate is taken as bullish or positive for the AUD. When the RBA appears with a dovish view on the Australian economy and also keeps the ongoing interest rate, or probably cuts the interest rate, it is taken as bearish or negative. 

The Reserve Bank of Australia has reached a conclusion to leave the cash rate at an unchanged record low of 1.5 percent after its November 2017 meeting, as many had earlier anticipated. Policy makers are of the view that the Australian economy is expected to advance at an annual rate of around 3 percent over the next few years to come. This is also supported by improving the outlook for non-mining investment while the inflation is estimated to pick up gradually as the economy gains grounds. 

HISTORY OF AUD INTEREST RATES

The AUD interest rates from February to November have been summarized below;

Date    Actual    Consensus    Previous

02-07-2017    1.5%    1.5%    1.5%

03-07-2017     1.5%    1.5%    1.5%

04-04-2017     1.5%    1.5%    1.5%

05-02-2017     1.5%    1.5%    1.5%

06-06-2017     1.5%    1.5%    1.5%

07-04-2017     1.5%    1.5%    1.5%

08-01-2017     1.5%    1.5%    1.5%

09-05-2017     1.5%    1.5%    1.5%

10-03-2017     1.5%    1.5%    1.5%

11-07-2017     1.5%    1.5%    1.5%

The effect of Interest Rates on the Forex Market

The forex market is controlled by the global interest rates. The value of a country’s currency is usually determined by its interest rates and one of the major nightmares of interest rates is inflation. The value of a currency in the international market is largely dependent on its interest rate thus the need to maintain a constant interest rate for a stable currency value. 

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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