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The RBA removes the mask of "foresight guidance" and the resolution this week may become a night of liquidation for Australian dollar bulls?
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Hello everyone, today XM Foreign Exchange will bring you the "[XM Foreign Exchange]: The RBA removes the mask of "forecast guidance" and this week's resolution may become a night for Australian dollar bulls to liquidate positions?" Hope it will be helpful to you! The original content is as follows:
The RBA has problems with xmtraders.communication, which injects unpredictability into interest rate policies in a situation where global uncertainty is already high, which proves to be expensive for investors.
It all stems from a reshuffle of the RBA in April that xmtraders.completely transferred interest rate setting power to a new Monetary Policy Board.
At its second meeting in May, the xmtraders.committee decided to lower the cash rate by 25 basis points to 3.85%, which sounded more dovish than analysts expected, and even considering the uncertainty brought by US tariffs, the xmtraders.committee members once considered cutting interest rates by 50 basis points.
Some weak economic data have led investors to bet on another rate cut in July, and a Reuters survey of 37 analysts showed that 31 analysts are expected to cut rates.
It is crucial that investors are encouraged to hold these positions in large quantities because the RBA has not lowered expectations as it has in the past.
Imagine how surprised they would be when the RBA Policy xmtraders.committee rarely decides to keep interest rates unchanged with a 6-3 split, causing many investors to suffer painful losses.
RBA Chairman Michele Bullock explained to the media after making the decision that the central bank could no longer provide guidance because interest rates were decided entirely by the policy xmtraders.committee and could not take pre-emptive measures.
Essentially, the RBA has changed the way it xmtraders.communicates with the markets without telling these markets that it has changed.
WestPacific Chief Economist and former RBA assister"Because no MPB member can lead the entire board, future inter-conference xmtraders.communications are unlikely to support or oppose market pricing," said President Luci Ellis.
This means that market surprises here will happen more frequently than countries such as the United States that focus more on avoiding market surprises.
A mild-performing inflation report has since led investors to a general expectation that the Monetary Policy xmtraders.committee will lower interest rates to 3.60% at its next meeting on August 12 — partly due to market belief that the central bank will not create policy shocks twice in a row.
However, the xmtraders.committee's special xmtraders.composition exacerbates policy uncertainty: its members include only two RBA officials, a senior Treasury official, and six part-time external xmtraders.committee members from economic, xmtraders.commercial and banking backgrounds. These external xmtraders.committee members are appointed by the current Finance Minister at the recommendation of the RBA.
The market is almost ignorant of the policy tendencies of these six xmtraders.committee members, and this situation is difficult to change in the short term - it is currently only vaguely stipulated that each xmtraders.committee member must appear publicly once a year.
This is likely to happen now: RBA board members have become minority in interest rate resolutions, but the Fed chairman still has to face the media's defense of its opposition to decisions.
What's even more difficult is that since the voting results are not made public, investors sometimes have no way to judge whether the central bank's position has been overturned.
"The current Fed chairman is more likely to lose in the vote because the number of external xmtraders.committee members is significantly superior," said Jonathan Kearns, chief economist at Challenger Bank and former senior RBA official. "I think the current xmtraders.committee is more daring to object to the president."
Jonathan Kearns noted, "this does bring additional risks, but the RBA needs to convince external xmtraders.committee members by providing rigorous analysis and meticulous advice."
This new governance model makes the RBA a "other type" among global central banks. The Fed and the ECB’s decision-making xmtraders.committee consists entirely of central bank officials, while the Bank of England consists of five central bank officials and four professional economists.
The Federal Reserve and the Bank of England will both disclose the voting position of each xmtraders.committee member—the differences of internal opinions among the two central banks have become increasingly obvious in recent months. RBA Vice Chairman Andrew Hauser recently admitted at an economic forum that the July interest rate resolution is indeed more difficult to predict than the level it should have, and admitted that the xmtraders.committee is still "exploring and moving forward" in the policy making process.
He insisted that this unpredictability would not be the norm, but warned that the market "still still suffer from an occasional shock." Investors who bet on interest rate cuts are eagerly looking forward to not becoming such an "unexpected moment" this week.
As of August 11, 2025, the current official cash rate of the Reserve Bank of Australia (RBA) is 3.85%.
As the RBA no longer provides clear forward guidance, market bets on interest rate policies are more likely to be misleading(If the unexpectedly maintained interest rates in July, it caused the Australian dollar to jump in the short term). If the RBA accidentally stops moving again, the Australian dollar may rebound in the short term; on the contrary, if it exceeds expectations, the Australian dollar may depreciate rapidly. The RBA's policy uncertainty has gradually evolved from short-term volatility factors to systemic risks of the Australian dollar. In the absence of clear guidance, the Australian dollar's sensitivity to market sentiment has increased, and traders may rely more on data-driven strategies.
The above content is all about "[XM Forex]: The RBA removes the mask of "forecast guidance" and this week's resolution may become a liquidation night for Australian dollar bulls?". It is carefully xmtraders.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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