Australian Dollar Rises After RBA Decision

The Australian dollar rose above $0.67 on Tuesday after the Reserve Bank of Australia raised its policy rate by 25 basis points to 3.1%, taking borrowing costs to a level not seen in a decade.

The RBA has now lifted the cash rate for the eight consecutive month and said that it expects to tighten further to bring down inflation.

RBA Governor Philip Lowe added that “the size and timing of future interest rate increases will continue to be determined by incoming data.” The board projected that inflation in Australia would peak around 8% this year before declining in 2023 and reaching a little above 3% in 2024.

Meanwhile, the aussie tumbled more than 1% on Monday after better-than-expected US services activity data suggested that the Federal Reserve could raise interest rates for longer.