AU Weekly Wrap | RBA Maintains Cash Rate at 4.35%; Fisher & Paykel Jumps on Higher Revenue Estimates

The Reserve Bank of Australia (RBA) has acknowledged the continued possibility of future interest rate hikes, citing persistently high inflation that is expected to stay elevated. In line with economists' expectations, the RBA maintained the official cash rate at 4.35% during its recent policy meeting.

Following the U.S. Federal Reserve's decision to keep interest rates unchanged and adhere to its forecast of three rate cuts this year, gold prices initially showed little change but then rallied towards record highs. The market expressed relief that the anticipated rate reductions remained at three, with the potential for a condensed timeline of cuts possibly amplifying their effect, as noted by Brien Lundin, editor of Gold Newsletter.

Australia's job growth soared in February with 116,500 new positions, significantly surpassing the previous month's 500 and beating forecasts with a drop in unemployment to 3.7%. This robust labor market strength complicates the Reserve Bank's efforts to meet inflation targets. Upcoming CPI and retail sales data will shed light on inflation trends.

Australia's private sector, driven by services, saw growth in March with the Judo Output Index rising to 52.4, marking the fastest expansion since April 2023. Business activity and employment rose as inflationary pressures eased. Optimism in the service sector lifted overall sentiment to a seven-month high, with its PMI reaching 53.5. Conversely, manufacturing continued to contract with its PMI falling to 46.8 for a second month.