Currency Buzz: AUD/USD Slumps After RBA Decides To Discontinue Bond Purchase Program

1 Feb 2022 , 10:34 AM

The Australian dollar slumped sharply on Tuesday, after the countrys central bank decided to discontinue the bond purchase programme and left its key rate unchanged on Tuesday. The policy board of the Reserve Bank of Australia headed by Governor Philip Lowe decided to cease the further purchases under the bond purchase program, with the final purchases to take place on February 10. Meanwhile, the board also decided to leave its cash rate unchanged at a record low of 0.10 percent. Further, the governor said ceasing purchases under the bond purchase program does not imply a near-term increase in interest rates. He added that the bank will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range. While inflation has picked up, it is too early to conclude that it is sustainably within the target band. AUD/USD slumped 0.5% to an intraday low of 0.7034 immediately following the RBA announcements, but above a recent 18-month trough of $0.6967. The pair currently stands at 0.7066.

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