Economists at TD Securities discuss the Reserve Bank of Australia (RBA) interest rate decision and its implications for the AUD/USD pair.

Hike 25 bps (40% prob)

“The motivation for the RBA to hike would be 1) It would be highly unlikely 1 month will be enough time for the RBA to assess the impact of its hikes since May'22. So why stop in April?; 2) The RBA could hike in April noting inflation is still high but signaling it's moving in the right direction leaving scope to pause in May following monthly inflation data for Jan and Feb suggesting Q1'23 CPI comes in below the RBA's implied 1.5% QoQ forecast; 3) The RBA pausing in April and then hiking in May potentially adds more confusion to the RBA's message. Historically once the RBA has paused on rate hikes, it has done so for a few months. AUD/USD 0.6720.”