The Bank previously previously cut the cash rate by 25 basis points at its November and December meetings, meanwhile the RBA last increased the interest rate by 25 basis points in November last year. Australia reported annual consumer price inflation of 3.1% in Q4 last year, compared to 3.5% in Q3, 3.6% in Q2, and 3.3% in Q1, and 2.7% in the December quarter of 2010, and only just outside the Bank's inflation target of 2-3%.
The Australian economy expanded 1.0% in the September quarter (1.4% in Q3), after contracting -0.9% during the March quarter due to the impact of natural disasters; placing year on year GDP growth at 2.1% in the September quarter, 1.1% in the June quarter, and 1.2% in the March quarter.
Following the announcement the AUDUSD jumped from about 1.07 to as high as 1.08 as traders reassessed their Australian interest rate path views. The Australian dollar (AUD) has gained about 6% against the US dollar over the past year, after reaching parity and climbing as high as 1.10 last year; the AUDUSD exchange rate last traded around 1.08
The RBA next meets on the 6th of March this year, and will release its February meeting minutes on the 21st of February.