RBA Raises Rates to 4.10% as the Middle East Oil Shock Starts Spilling Into Currency Markets
🌍 The FX market opened the week cautiously, with the U.S. dollar holding firm on safe-haven demand while higher oil prices continued to raise concerns about a new wave of global inflation pressure.
🏦 The RBA then delivered a 25 bps rate hike to 4.10%, marking its second consecutive increase. The key detail was the narrow 5-4 vote, showing policymakers remain divided even as the central bank acknowledged that rising fuel costs and higher inflation expectations could keep inflation elevated for longer than previously expected.
📉 This suggests central banks are starting to respond more clearly to the war-driven oil shock, but the market still lacks consensus on how far tightening may go from here. That leaves AUD supported by the rate backdrop, while short-term volatility is likely to stay elevated as traders continue repricing a busy week of major central bank meetings.