AUD/USD: RBA expected to implement consecutive rate increases – BBH

Australian Dollar Gains Strength Amid RBA Policy Expectations

Elias Haddad of Brown Brothers Harriman notes that AUD/USD has climbed past the 0.7100 level, with upward momentum targeting the 0.7150 mark. Recent sentiment figures from Australia have done little to shift market expectations regarding the Reserve Bank of Australia’s (RBA) next moves.

Key Developments:

• The Australian dollar has advanced above 0.7100, approaching resistance near 0.7150 seen in mid-February.
• Recent business and consumer sentiment surveys in Australia have not significantly altered forecasts for RBA rate hikes, although some labor market data points to emerging challenges.
• The NAB business employment conditions index dropped by 2 points to +3 in February, which aligns with a potential increase in unemployment.
• Consumer sentiment regarding unemployment, as measured by the Westpac–MI index, climbed 3.8% to 134.7 in March—surpassing its long-term average and indicating growing concerns about job prospects.

Despite these mixed signals, Haddad suggests that the RBA is likely to proceed with another rate hike at its upcoming meeting on March 17. This view is underpinned by the central bank’s internal models, which point to a positive output gap and mounting capacity pressures.

Market pricing currently assigns a 55% probability to a 25 basis point increase, which would bring the cash rate to 4.10% at the next policy decision.

(This report was generated with assistance from an AI tool and subsequently reviewed by editorial staff.)