The RBA kept rates at a 12-year high of 4.35% on Tuesday but cautioned there were still reasons to be vigilant against inflation risks
Asian stocks tracked Wall Street higher on Tuesday ahead of a chorus of Fed officials due to speak later in the day, while the Australian dollar held steady after its central bank offered few surprises in its policy decision.
The Reserve Bank of Australia (RBA) kept rates at a 12-year high of 4.35% on Tuesday, as expected, but cautioned there were still reasons to be vigilant against inflation risks.
Traders pared back on bets of a rate cut this year in the wake of the RBA decision, though the Aussie dollar was little changed as the statement contained few surprises. It last bought $0.6612.
The outcome of today’s RBA Board meeting was neutral in line with expectations, according to Tony Sycamore, a market analyst at IG.
He added: The RBA will remain on hold until it gets a clearer reading that inflation is on track to return to target, or the economy has hit a pothole – whichever comes first.
Ebbing concerns over political turmoil in Europe added to the buoyant market mood on Tuesday and sent EUROSTOXX 50 futures up 0.35%, reversing some of its sharp losses from last week. FTSE futures similarly added 0.25%.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.64%, helped by an overnight rally on Wall Street.
Optimism over a resilient economy, improving corporate earnings and the potential start of rate cuts has supported equities, defying concerns that the rally has been concentrated in just a few mega-cap tech stocks, according to Jameson Coombs, an economist at Westpac.
Japan’s Nikkei added 0.76%, alongside Chinese blue-chips which rose 0.15%.
Central banks in Norway, the UK and Switzerland are also due to meet this week, where bets are for the former two to hold steady on rates and for the Swiss National Bank to deliver another 25 bps of easing.
